Resolutions for Better Finances by Darren L. Zagarola, CFP®, CPA, PFSAs published in the Princeton PatchThis past holiday season, like all the holiday seasons before it, was a time for individuals to be with family and friends and to re-focus on what is truly important to them. It’s a time to reflect on the year past and plan for the upcoming year; a time to focus on values. For most of us, this is a time of personal internal reflection as the holidays turn into the New Year and a time for resolutions. As January rolls in, people start to think of their physical, spiritual and mental well-being and the changes they will make in the upcoming year, such as spending more time with family, having more balance in their lives, reducing stress, exercising more and eating less.Unfortunately, most people fail to address something equally important: their financial well-being. Most do not realize that setting and meeting financial goals can be vital to achieving their personal goals and eliminating a major source of stress. For example, one might resolve to spend more time with their family, but find when they are home they are overwhelmed with thoughts related to dealing with personal finances. The feeling of being overwhelmed tends to stop people from completing tasks at hand, eventually leading to continued or increased stress. Organizing one’s finances each year is just as important as taking on the junk drawer, attic or garage. Below are four resolutions that will help you both personally and financially and can easily be implemented:Analyze your cash flow. The beginning of the year is the best time to analyze one’s cash inflows and outflows from the prior year and prepare a budget for the new year. Account for changes such as a year-end raise which would increase 2015 cash inflows. As far as cash outflows, review monthly credit card and bank statements to see where money was spent. Remember to include ATM withdrawals. Consider using a simple Excel spreadsheet, or software like Quickbooks or Mint.com. Note expenses which are expected to repeat vs. one-time or unusual items. This provides a foundation for the upcoming year. This exercise alone tends to reduce stress levels as it provides an understanding of where the money goes, as opposed to worrying and wondering about where money disappears to each month.Shred / purge unneeded personal files. This is a time to examine personal files and records and shred unneeded documents. Surprisingly, this purging also provides additional stress relief.Create a savings plan. Once net cash flow (cash inflows minus cash outflows) has been identified, the next step is determining how much can be saved. Calculate a monthly amount that can automatically be put into a savings, brokerage or retirement account. Automating the deposit ensures the savings happens and the financial goal has a better chance of being met. As part of every set of financial resolutions, we recommend participation in employer-sponsored retirement plans (i.e., 403(b) or 401(k)). This reduces the amount of income taxes that will be owed - and who doesn’t like that? Contribute at least enough to maximize any company match your employer might provide. Consider making contributions a percentage of pay, as opposed to a straight dollar figure. This ensures savings plans automatically increase when raises are received; no need to remember to make the change manually. Building a nest egg makes people feel better, building confidence that their long-term goals will be met.Rebalance your investment portfolio. The beginning of the year provides an excellent opportunity to rebalance investment portfolios. It is likely that when the portfolio was established, it was done so with a long-term goal and strategy that called for a specific percentage of the assets invested in equities versus fixed income. As the year goes along, the value of individual investments become varied. We recommend rebalancing based on original or updated goals on at least an annual basis. This automatically causes certain investments that have grown to be sold and assets that are at a value to be purchased. It is also a great time to review whether any individual assets need to be replaced. Remember, the asset classes that perform well one year do not necessarily perform well the next year. While rebalancing semi-annually or quarterly is ideal, doing so at least annually can eliminate some stress and provide more time for the other important things in one’s life. Remember, a goal without a plan is a wish. Set goals and resolutions that are realistic and manageable to maximize your chance of success. The majority of unmet resolutions are due to the goal being unattainable at the start. Do not bite off more than you can chew and stick to the steps explained here to reap the rewards of less stress and more time for personal satisfaction and growth.