As Rosh Hashana approaches, many of us are preoccupied with trying to improve ourselves spiritually in the coming year. This is naturally the time of the year when we tend to focus on these issues, whether in terms of the relationship between man and G-d or between man and man. While the spiritual side of things takes precedence, we shouldn’t neglect our finances. After all, our financial situation for the upcoming year is set forth on Rosh Hashana.

Financial diet

Many people say that if they made a lot more money they would be able to save or invest their resources, but on their small salary this is not possible. However, there are plenty of people who earn very large salaries but still land up in overdraft at the end of the month. The reason for this is that they have absolutely no idea how much money they are spending or exactly where it is going.

The first step in making financial order is to make a budget.

When you know what you are actually earning and what your expenses are, you’ll probably be surprised to find that there could be something left at the end of the month. When creating a budget, make sure that it is realistic, matches your lifestyle and that it leaves plenty of room for extra expenses that seem to pop up regularly (like a broken fridge or child’s glasses). Build a monthly budget to determine a monthly savings goal.

Although nobody said it’s easy saving on an Israeli salary, as with most things in life, it can be accomplished with hard work.

In the secular world, it is common practice to make “New Year’s resolutions,” and one of the most popular of these is to lose weight. The key to successfully losing weight is self-discipline, by eating healthier food and limiting consumption, along with following an exercise program. On the other hand, if a dieter says he wants to lose 15 kilograms this year but he doesn’t follow a specific plan, he is more likely to fail. He might lose a few pounds quickly, but if he ends up finishing off a pan of brownies on a Shabbat afternoon, chances are that the extra kilos won’t stay off for long. Budgeting is the same. If you create an unrealistic budget, you’ll likely save less than what your budget calls for, become frustrated and resort to your old ways.

Should I buy this?

Every time you are about to make a purchase, you should consider very carefully whether it is really important and if you actually need it. If the item doesn’t fit those criteria, it is better not to buy it. Just because your neighbor decides to make a large purchase or take the family away to a five-star hotel for all of Sukkot, it doesn’t mean that you need to do the same thing if you can’t afford it. While there is nothing wrong with spending your hard-earned money, it just needs to be done in a responsible manner.

Start

The most important advice is just to start. Start small. When it comes to doing teshuva (repentance), we are not expected to become perfect individuals overnight, and we need to start small and work day by day to improve ourselves spiritually. The same idea applies to our finances. You don’t have to wait until you have $250,000 to start. Whether it’s an old IRA that you opened when you were still in the US, or $30,000 sitting in the bank, just start getting your finances in order.

May we all merit a happy and healthy new year and a ketiva v’chatsima tova.

aaron@lighthousecapital.co.il

Aaron Katsman is a licensed financial adviser in Israel and the United States who helps people with US investment accounts.

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