The past years have been tough for a lot of people and looking at some financial tips to start the year can help you get on the right path to success.
It is definitely not a walk in the park when it comes to getting back up in terms of your finances. The past years have been a challenging time for a lot of people. There are those who were able to keep their jobs, some were put on furlough, while others were let go. Businesses either had to slow down or close their operations entirely. Needless to say, the past few years was a financially challenging one for a lot of people.
But now that the economy is starting to recover, so do people as well. A lot of Americans are finding their way back to their old job or to new opportunities that have opened up This means people are beginning to receive regular paychecks again and are able to plan ahead as well. This is a big development from
Invest in your health
One of the best financial tips to start the year is to pay close attention to your health. A lot of this has to do with the health crisis that swept the world in the past 2 years. The novel coronavirus infected a lot of people and killed so many as well. It underscored the fact that no matter how much money you have in the bank, your health is and should still be a top priority.
It does not mean that you will forget all your financial priorities. They still play a huge role in your life and in reaching your goals. But your health is just as crucial, if not equally important part of your priorities. And as the new year starts, it is a good idea to revisit your health goals and take a long look at your current health situation so you can make plans moving forward.
The CDC shares that obesity can be a cause of some health conditions such as stroke, diabetes, and even heart disease. Take a look at your food intake as well as your exercise regimen. When you work on these two together with consistency, you could see amazing results. Also, you get to enjoy life more with people that matter to you.
Strengthen your emergency fund
Coming off from the recent experiences of the past 2 years, financial tips would not be complete if they did not point out the need for a strong reserve fund. It is one of those things in life you wish you wouldn’t need but you’re glad to have. During the pandemic, it was tough to get ahead and manage your day-to-day finances because your income could have been impacted by the crisis.
At that point, you had to rely on your reserve savings to cover your needs, especially your daily expenses. The bigger your savings, the longer you can hold off before you begin charging your basic needs on your card. Or worse, you might have to take out high-interest loans which could get you into more trouble. This is why your reserve fund is important.
For some, reserve funds consist of two types of funds – emergency funds and rainy day funds. The emergency fund is meant to cover the big setbacks you might experience like losing your job. The rainy day fund is used to address smaller needs like minor car repairs. The objective is to make sure that the emergency fund is intact when you need them. But regardless of how you want to save for future needs, the important thing is to start now.
Create alternative income streams
Putting effort into identifying and growing side hustles for the year can be a great way to help you get ahead and accomplish your goals for the year. Take note that ideally, you have a regular job that can help pay the bills and cover basic costs at home. This is because side hustles and other forms of income streams could be quite unpredictable.
That being said, a great place to start is taking a long hard look at the things you enjoy doing outside work. Is it creating art, baking cookies, financial literacy for people around you, or even fixing vehicles? Once you identify that hobby, explore the opportunity to turn it into an income-positive hobby. This way, you get to do what you love to spend time on and at the same time, earn money as well. But you need to approach this with caution.
There are instances where you might begin to feel pressured by the fact that you have to instantly start earning significant money from your hobbies. When you run out, it could also lead to avoiding your hobbies altogether. Find a balance between earning money and enjoying your time. This can help you increase that side-hustle income gradually over time.
Don’t put everything in one basket
Yes, the age-old advice of dividing your assets across several investment options still holds true up to this day. Especially with the effects of the pandemic, you need to make sure that you are able to mitigate loss and still find a way to earn off of your investments. This is one of the best financial tips you have taken to heart this year.
If you have one, talk to your investment manager to make sure that your money is spread out across several investment types. The goal is that if one of that investments goes down, you still have money in other investments to cover up the losses and at times, still provide growth overall. But if you do not have an investment manager, this tip can still work in your favor.
If you are putting money into a business, always make sure you have a backup plan or an exit strategy. It can be a lump sum you have saved up to help you bounce back in case your business does not pan out. You could also invest in other businesses to help you make a smooth transition from your business over to another if need be. Bottomline – do not put all your money in one place.
Financial tips for the incoming year need to include forward planning as well. This normally refers to your short and long-term goals. Your long-term goals should not change every year. These are targets you have that stretch more than that. It can be retirement plans, mortgage plans, the career paths you want to take, or even having a family. You can constantly revisit them to make sure that you are still on track but changing them often could prove to be challenging for you. But for your short-term goals, that is different.
These short-term targets can change every now and then based on where you are at present and what you can achieve in a short amount of time. However, remember that these short-term targets should always bring you closer to your long-term goals. That being said, your short-term goals need to be planned out early in the year.
If your plan is to pay off your mortgage early, then your short-term goals might mean identifying side hustles for the year. It can be tapping into your hobbies and making them income-positive ventures. If your long-term goal is to start a business, one of your targets for the year is to network and identify opportunities within the industry you want to get into.
There are a number of financial tips you can use for the year to help you get started on the right track. The idea is not to use all of them but identify the ones most applicable to your current situation and build on them.