There will be many financial prophesies about the coming year and recommendations for how we should adjust our finances to prepare for them. And many of them will contradict each other, leaving us wondering if anyone really has a good idea of what will happen and what financial changes we should make (if any). The answer of course, is that no one really knows the future and that things often turn out very differently from what we expect. Even the things that are already set in motion are subject to change. Here are a few examples.

1. The Federal Reserve has announced that it will begin to taper off its’ program of buying $85 billion-a-month in bonds. This will affect interest rates, the stock market, and bond prices, but just how remains to be seen.
2. Tax laws have changed with many tax breaks expiring last December. Congress may renew some of these, but we don’t know which ones, so the changes and effects are impossible to determine.
3. More Affordable Care Act mandates will kick in (maybe) and affect businesses as well as individuals. Since the administration has been adjusting the law as it’s been rolled out, we don’t know how the mandates could change and if deadlines will be extended.

Many things will be in flux this year, and how they will affect each of us is unique as well as unknown at this point. So how do we plan? Well, there are some things that we can do that will make our financial situation better regardless of how things change. Here are a few that never fail.

1. Reset our goals for debt reduction and renew our commitment to eliminate all of our debt. There is never a bad time to reduce debt, and as long as we don’t over-extend our monthly budget. We can increase our payment amounts and retire debt sooner. We should always include a timeline in our goals too, so that we can measure our progress and see the results of our efforts.
2. Keep spending under control, and commit to living within or below our means. A review of our monthly budget will show where our money is going, and can quickly highlight areas where we can lower expenses. By controlling spending, it’s much easier to carve out some of our income for saving.
3. Stick with our savings plan, or establish one if we haven’t taken this important step. Putting even a small amount away in savings each week will grow over time and shield us from taking on debt when the unexpected happens. To make it easier and routine, we can use automatic deposits or transfers.

This coming year we can expect interest rates to rise, fall, or stay about the same. We can also expect the stock market to rise, fall, or fluctuate all year at about the current level. These things are out of our control and beyond anyone’s ability to predict. What we can control is how we manage our own finances, the financial plan that we put in place for the coming year, and how well we stick to our plan.

Have a healthy and prosperous year, and thanks for reading.

Let me know of any changes you’re planning for the coming year.