The last thing on your mind after the holidays could be a financial checklist. However, if you think about all the expense you just incurred, it might be high time you peek into your financial activity. Not just for the immediate holiday spending but for a whole year’s worth of money management. This is a perfect time to sit down and go over it just after Christmas and before the new year starts.
You might have faced big expenses this year such as getting a house, buying a car or even taking out a big student loan for some post-graduate studies. There is nothing wrong with any of these as they all help increase your net worth. Provided that you are able to manage the payment wisely and that you are careful in adding big and unnecessary expenses.
The problem, however, is that the holiday season has been synonymous to big spending. As proof, Forbes.com recently shared in an article that once the 2016 holiday is done and over with, consumers would have spent over $1 trillion. Let that sink in for a moment and it should give you an idea just how much people have been spending the past few weeks.
However, the holidays does not have to be all about expenses and it shouldn’t be. Apart from being the perfect time to spend with family and friends, you can also use this time to look back at your financial checklist so you can move forward with your goals for the coming year. It is easier to plan for the future if you know how you managed your finances for this year.
Getting back on track with this financial checklist
If you are ready to roll up your sleeves and dig into your financial activity for the year and especially the holidays, here are few things to look into. This checklist can help you cover most, if not all the bases in your financial list.
Check if you were on budget with your holiday spending
NRF.com shared that consumers are looking to spend about $588.90 for holiday spending to cover gifts for family, friends and even co-workers and other people in their lives. Now that Christmas is over, you need to look at how much you spent and compare that with the budget you set for holiday expenses. The idea is to spend exactly how much you budgeted for or preferably less. This is a good start to your financial list.
Have a draft of financial goals to aim for in the coming year
One of the ways to manage long term goals is to have a list in the first place. It is quite challenging to commit these plans to memory especially as they take years to complete. You need to list down your financial goals whether they are short or long term targets. You need to also break these targets down into smaller steps so as not to overwhelm you and make you lose sight and focus. A $100 / month target for a particular savings target is better than burdening yourself with the thought of a $1200 goal.
Make preparations for the new year expenses
Christma may be over but you need to make a budget for another expense item, New Year’s celebration. It might not be as big however, there will be expenses nonetheless. The good news is that it will mostly entail food or travel expenses as you try to figure out how you can spend quality time with your family. Not as big as the budget you had for gifts and other Christmas expenses but you should plan for it to help you start the new year on the right financial footing.
Check your monthly budget and look for ideas to lower down expenses
Your financial checklist would not be complete if you do not spend ample time looking over your regular monthly budget. This is a good exercise before you start the new year and rely on your budget to get you through month on month. Doing it at the beginning of the year also keeps you motivated with your budget and increases the chances that you will stick to it more in the coming year.
Explore additional sources of income for the new year
People often said that the biggest room in people’s lives is the one for improvement and this can be a big part of your financial checklist by looking at ways to increase your income. This financial strategy usually goes hand in hand with lowering expenses as a two-pronged approach to managing a budget. However, consumers would normally just try to find ways to lower down expenses as it is relatively easier than looking for a second job. It might be a better approach to start planning for it more proactively at the start of the year rather than being forced to look into it when there are problems that creep in your finances.
Check and adjust your reserve funds for the new year.
Your reserve fund is your financial cushion when you are faced with the unexpected and the bigger it is, the more relevant it becomes in your finances as well as managing your stress level. WSJ.com shares that consumers need anywhere from 3 to 18 months of emergency money depending on whether they are employed, running a business or a retired individual. The bottomline is that everyone needs to have at least a decent amount of money stashed up for emergency and this needs to be part of your financial checklist. Understand where you are in terms of money saved up and how much you actually need. If you are still far off your target the devise a way to reach your goal. If you are already at that level then look at how you are distributing that money considering that you need to have quick access to it anytime you need it.
Look at your retirement track
If you are serious about planning for your financial future then your retirement fund needs to be one of your priorities when looking at a checklist. This is one of your long term goals that you have to work on religiously because the money needs to build up over time. The earlier you start and the more committed you are, the bigger your fund can be. You also need to be smart in managing your retirement fund such as maximizing your allowable 401(k) contribution annually and even taking advantage of your employer’s matching program to increase your fund. Of course, you need to consider your company’s vesting schedule if you are planning to move and transfer to a new company every few years.
Plan your next trip
This might be a little hard to understand at first but it simply means that you need to have a system in place that rewards you for hard work. You cannot go through life with your focus solely on work. There have to be times as well where you reward yourself and learn to have a good time. The challenging part in this is putting in a reward that totally negates all the work you have put in your financial planning. This forces you to keep coming back to square one and missing out on perks along the way such as earnings on compound interest.
Having a financial checklist after the holidays might be cumbersome but necessary nonetheless. You can think of it as a gift to yourself because you are investing time in making sure your financial future is protected and on track.