Both the Dow and S&P set new all-time highs again last week. On December 13th, the US and China announced a “phase one” trade agreement has been reached. Economic data from Europe has eased some concerns about their economy and global growth. The yield curve, which we explained on a previous edition of The Daily News Brief, has steepened, indicating a recession may be less likely in the near future. The markets have largely ignored the impeachment of President Trump by the House.
The end of the year is a great time to consider your budget for next year. I tend to think of a budget as being separate from managing cash flow. Budgets are more big picture, giving you an idea of what you can and can’t afford, whereas cash flow is more day-to-day life.
When you develop a budget, start with your take-home pay. From there, consider housing costs, including utilities, homeowner’s or renter’s insurance, and especially ongoing maintenance/repairs if you’re a homeowner. Having a car in your budget includes not just the payments, but also gas, insurance, and maintenance costs. If it’s an older vehicle out of warranty, add some money to your budget for repairs. Food costs should include both groceries and dining out. If you have a pet, remember to include vet visits, food and treats, and boarding or a pet sitter if needed. Your savings should be included as part of your budget; both retirement savings and an emergency fund are important. Starting with necessities and moving on to “wants” and “nice-to-haves” allows you to see where you can make changes, and what you can afford.
If your budget isn’t adding up, look at where you can cut costs: maybe you cut the cord and eliminate cable; you stop subscriptions to things you don’t really use. You can also plan to brown-bag it most days, or invite friends over for pasta and a movie instead of a night out on the town.
Many of us are fortunate enough that we don’t really need to make a budget. We can cover our bills and still have money for our wants. Even so, building an emergency fund, setting aside money for travel, a second home, or potential opportunities can seem out of reach. A great way to start there is to direct deposit a small amount from each paycheck into a savings or money market account that you don’t see when you check your bank account. Out of sight, out of mind. If you don’t miss that first little bit, in three months, increase it. Working up makes it easier to stick to the plan, instead of starting high and realizing you’re strapped for cash.
Just like being mindful of physical things such as our breathing or the food we are eating, being mindful about money can provide peace of mind. Running through the drive-through doesn’t seem like a big deal, but over the course of a year, it adds up. Being conscious of our spending can open up opportunities to save for our big wish-list items.
If you’re interested in learning more, our calendar of educational events for 2020 is up on our website, www.covingtonalsina.com/events.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.