The year is about to end and you need to start thinking about the financial moves that you have to do once all the festivities are over. Right now, you are probably busy trying to strengthen your finances for the coming new year. If not, then you need to start working on your finances to tie up loose ends before we say goodbye to 2017.
But even if you work on your finances before the end of the year, your efforts will be for nothing if you fail to follow it up once the new year begins. After all, financial management is not a one-time task. Neither does it happen overnight. It requires continuous effort in order to maintain a great financial position. If you want to feel contentment with your financial situation, it is important for you to always implement the right habits that will strengthen your personal finances.
The new year is the best way to implement the right financial moves that will take your personal finances to the next level. This is probably why a lot of people set their own New Year’s resolution – specifically when it comes to their finances. Some people succeed at it. Others stop working on it by February. If you want to set yourself towards the right direction, you need to come up with a plan at the beginning of the year so you can start as early as possible.
Steps to secure your finances next year
Fortunately for you, there are many financial moves that you can do in order to improve your personal finances. Here are some of the steps that you need to do if you want to have financial security in 2018.
Review your current financial position
It all starts with how much you know. You definitely need to know what goes on in your finances. A study published back in 2014 revealed that a lot of people around the world are financially illiterate. Apparently, that ignorance will lead you to make bad decisions. The thing is, this is something that you can easily avoid. You do not have to be a rocket scientist to do this. You just have to review your own finances. Ideally, you should also keep tabs on what happens in the national economy. You need to know if the interest rates are rising or now. But even if you do not know these details, having a firm grasp of your personal finances should be enough to help you make the right decisions. When you know your financial capabilities and responsibilities, you can make the right choices and more importantly, avoid making mistakes.
As you are checking out your financial position, do not forget to look into your debt as well. You need to make sure it will not get out of hand. If you see that your debts are starting to go higher than you can afford to pay back, that is an indication that you need to do something about it.
Come up with a financial goal and a plan to reach it
Once you have a firm understanding of your financial position, the next move that you need to make is to set a financial goal. What do you want to achieve by the end of the year? If there are long-term goals that you want to reach, this is the perfect year to get started on it. Having a goal will motivate you to make the right financial decisions. Not only that, it will also give you a hint about the specific decisions and transactions that you need to do. While having a goal is great, you still have to make sure that it is realistic. An unrealistic goal will only bring you unnecessary stress. A great financial goal includes saving up for retirement, a downpayment for a house, a vacation, and even a new dress for the wedding that you will attend later this year.
Once you have your goal (or goals), create a plan to reach it. The most simple one is to identify the target date when you want to meet the goal and the amount. You will then work back to compute how much you need to save each month to reach your target.
Keep yourself motivated
The next financial move that you need to work on is motivation. Setting the goal is only half of the battle. You still have to go through the journey of reaching it. However, that is easier said than done. There are so many temptations that will make you itch to spend the money instead of saving it to reach your goal. You have to develop your self-control and discipline. You should stick to the plan that you created. It helps to just remove the savings right after you get your paycheck. That way, you will not really miss it if it does not register in your mind that it is there. Save it and forget about it. This will keep you from feeling tempted to use it.
Go on a financial diet
This simply means you need to lower your spending. This does not really have to be forever. You can do it for a month or so after the holidays. This will be a welcome relief after spending so much money during the last few months of 2017. You can help your finances recover. So how does this financial diet work? Well, you can focus on spending only what is necessary to survive for a month. You will not spend on extra purchases and only use your money for the essentials. Bring a brown bag to lunch. Do not eat out for a month. Keep yourself from buying something new that you do not need. There are many things that you can do to lower your spending for at least a month. If you can do it for longer, that would be better. Anything that you do not spend should be put towards your savings.
Make sure your emergency fund is updated
Check your emergency fund and make sure you still have enough money there. If you spent it in 2017, that means you need to replenish what you spent. Not only that, you might want to add more to what you have put there. Having more than enough in your emergency fund is never a bad thing. Of all the financial moves that you can do, this will really help keep your finances secure. It will keep you afloat even when something unexpected happens. If you lose your job, this will help pay for what you need for a while – giving you enough time to get back on your feet. In case someone needs to see the doctor, you do not have to hesitate because you know you can afford it.
These moves might seem simple but you might be surprised at how it can improve your personal finances for the better. The truth is, you can reach your dreams even if you have limited financial resources. You just have to make sure that you make the right financial moves and decisions about your money.
How to be smart with your money next year
Obviously, you need to be smart with your money if you want it to improve next year. Here are some tips that will help you do this.
Automate your savings
46% of Americans admit that they regret not saving enough. The truth is, it is easy to forget about saving because of the many temptations to spend. But if you automate it, you do not have to worry about not being able to save. And by not physically putting the money into your savings, you can literally forget about it. The temptation to spend it will no longer be a problem.
Invest your extra money
It does not have to be a huge amount. It can be small – it doesn’t matter as long as you invest it. Most people fail to invest because they think that they need to invest a big amount. That is not really true. What is important is investing early and consistently. This is how you can You should not touch it until it is absolutely necessary. That is how you can let it grow to make your future more secure.
Save windfall money
If you happen to receive any unexpected cash – like a bonus or a cash gift, do not spend it. Since this was unexpected, you probably did not allocate it to be used in any of your bills. You need to take advantage of this free money. Either save it, invest it, or use it to pay off your high-interest rate debts.
Monitor your spending
Finally, one of the financial moves that you need to do is to monitor your spending. Make sure it is going where it should go. More importantly, you have to ensure that the important expenses will always be prioritized. According to a study, only one out of three Americans know their monthly budget. If you have no idea what your budget is, you are more prone to make bad financial decisions. Make sure you get to know your budget so you can monitor your spending properly.