The New Year is right around the corner and you are probably planning a number of resolutions that you are hoping to stick to. This is not only a time to review your personal goals, but also a fresh start for your financial goals.
Reach your financial goals this year
January is the perfect time to review and assess your current financial plan and decipher ways in which you could improve on it in the New Year. It is a good idea to set out clear and concise financial resolutions for the New Year to ensure that your financial choices are beneficial to your future. You don’t want to end up dealing with any overwhelming debt or expenses.
Reflect on the year you have had
Create an overview of your financial year - what you spent, what you earned and how you managed throughout the year.
Then sit down and think about what you feel you did well, and what you did wrong. Are there any mistakes you made? Are there any actions you took that really helped you?
Having a clear understanding of your financial year will help you to consider which financial habits you should bring with you into the New Year, and which ones you should leave behind. It can also help you to plan. For example, it can give you insight into what you are spending on, so you can see what is necessary and what you can cut out.
Start with these good financial resolutions:
Set by setting clear budget for yourself
Setting realistic and concrete financial resolutions and sticking to them is sure to help you reach your bigger financial goals in the future. It will also ensure that you endure the least amount of financially related stress possible.
Conduct a thorough analysis of your income and expenses. Understanding your financial inflow and outflow is crucial for building a realistic budget.
Create an emergency fund
It is important to create and build an emergency fund so that you are prepared for a costly unforeseen circumstance or unplanned expenses. Your goal should be to try and save at least three months’ worth of living expenses so that your budget is not affected if an unexpected cost comes up.
Pay off your debt
If you receive any extra money in the New Year, use it wisely. Instead of splurging on something that you don’t really need, put the money towards paying off your debt to lighten your financial load.
Putting a lump sum towards your debt will lower your monthly debt repayments, freeing up some of your income to add to your savings fund or put towards other expenses.
Plan to save in small ways
One small way you can save is by packing lunch, rather than buying. You will save a considerable amount of money if you plan and pack a lunch to work a few days a week. Packing your own lunch is a cheaper alternative but you will also save on bank charges by not swiping your card or withdrawing money every day.
Cut unnecessary expenses
Going through bank statements will help you find areas where you can reduce spending . For instance, many people are subscribed to services that they have forgotten about. Unsubscribing to things you no longer want or need can save you a lot!
You can also save on buying too much clothes, by shopping for “evergreen” items that don’t go out of style. This limits unnecessary clothing shopping trips!
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In addition, you can implement strategies like shopping lists and avoiding spontaneous purchases to help you save more.
Become financially literate
There is value in understanding how to make your money work for you. In this day and age, you can get educated for free and learn to optimise your finances as much as possible.
Check out Old Mutual, for example.
Remember to do thorough research, and possibly speak to a professional, before making any commitments.
Improve your credit score
Your credit score has a major impact on your financial life. It can affect your ability to be flexible, your financial mobility, your interest rates, and much more. So, it will be worth your while to improve it!
The best way to improve your credit score is to:
Check your credit report regularly
Pay your accounts on time
Pay the full monthly instalment
Never ignore credit provider letters for non-payment
Track your credit history to see if there are any inconsistencies
Be savvy with your credit - be careful not to overspend
Keep your personal information safe so that you avoid fraud
Create monthly check-ins to maintain your progress
Set up a standing time every month to reflect on how you’re doing. This gives you a chance to get back on track if you have strayed, and gives you time to pat yourself on the back if you have done well!
Celebrate your wins
It’s difficult to stay motivated all year long. There are hard times to get through and so many things can be demotivating. So, when you do achieve a milestone, remember to celebrate it! It will keep you going.
Have a good financial year!
Your goal is to have a positive net worth value at all times and it should be increasing as time goes by.
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