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For those of us who struggle to stick with New Year's resolutions, setting goals this time of year can seem futile.

But with the right tools, financial adviser Matt Sivertsen, of Planning Center in Moline, said New Year's can be one of the best times to rethink your finances and set new goals. 

As the new year rolls around, he advises consumers to think about the past year, reconsider spending budgets and saving habits and work toward goals for the coming months. Here's some of his advice on financial planning for 2019.

Rethink your spending budget

The New Year can be a good time to look over financial statements from the past year and understand your spending habits.

It's important to consider whether you've been able to stick to your monthly budgets over the past year, and if not, what might have gone wrong.

Sivertsen said understanding your cash flow and goals is the first step to creating a new budget for the new year. 

"You need to get an understanding of where you sit today before you set goals," he said. "It's important to break out expenses, including what it takes to pay bills to run your household, other financial commitments and payments, and the weekly needs for your family on a seven-day basis."

Once you balance the money coming in with the money going out — including debt repayments — you can figure out what's left to save for bigger ticket items. 

"When people don't know what they're spending on bills or have some way to track their weekly variable spending, that creates boundaries and barricades," Sivertsen said. "Then, you likely have nothing left for goal planning." 

He said most people struggle with budgeting when bills and regular expenses take up too much of their monthly take-home pay. He said mortgage payments, car payments, living expenses, debt repayments and other regular expenditures shouldn't exceed 50 percent of your net pay. 

While living on a tight budget can make lessening that amount challenging, he said now is the time to think about where you can cut back. 

Restructure your finances

Sivertsen also advises people to think about the structure of their finances.

"Budgeting is a tough concept, especially line-item budgeting," he said. "A lot of times it's a challenge for people who aren't accountants or engineers. So can we rethink the structural boundaries of our system? I've seen people have successes with this — people who feel negativity and restriction when they think about budgeting." 

He said one potential framework to use is to create one account to pay regular bills and then a separate account for debit card spending. 

"Keep your weekly expense debit account separate from your bills, and then have multiple savings accounts earmarked for goals," he said. "Separate savings accounts are a really effective way for saving for vacations, Christmas next year and other goals." 

Sivertsen advises naming each savings account to be related to your goal, whether it be saving for a new car or a vacation. 

Set yourself up for success

While thinking about what expenses are expected this coming year — maybe a new car, new home or new family member — Sivertsen said it's a good idea to make saving as easy as possible.

He said consumers should figure out how to structure your finances to automatically save.

"Replicate what your paycheck does with a 401(k). It comes out of your paycheck and you don't notice it," he said. "You can set a goal and create an account, then each paycheck, move over so much toward that goal." 

He said it's important to figure out how to save a predetermined amount to go toward your goal or create a plan to be ready to regularly put down payments on a bigger home, car or other items. 

"Be realistic and really start with things you think you can achieve," he said. "Start some automated savings and allow the rest of the stuff to happen naturally. Set realistic goals and put savings into place, and then see how it works to shake out the rest of the stuff you want to do this year."  

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Sarah Ritter is the business reporter for the Quad-City Times. Each week, she will write an experiential column as part of the series, "Cash Course," aimed at reaching financial security and tackling stereotypes about money. Have an idea or want to share your money story, email sritter@qctimes.com.

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