How important is it to strengthen your finances in time for next year? Well, that depends on what you want to happen. Only a few more weeks are left and the year will be ending. This is a pretty good idea to start working on your financial situation. While it may be too late to end it with a bang, there is still enough time for you to prepare your finances so you start the next year right. As you enjoy the last holiday of the year, you have to find time to plan what you want to happen to your finances next year. While all the parties, gift-buying, and festivities can be distracting, you need to keep your finances on top of mind.
It is easy to lose track of your funds during the Christmas time and once that happens, you would be starting the year on the wrong foot. Much like how you would have a hard time getting in shape when you eat too much during the holidays. It is still possible to start a diet and pick up a new exercise routine but it would take you a lot longer time if you watched what you eat during Christmas.
The same goes for finances, once you start losing track of your spending this month, you would have a tougher time managing your funds at the start of the year. So, rather than weakening your finances, try to find ways to strengthen your finances before the year ends. Take note that strengthening your finances go beyond making financial resolutions for next year. According to an article published in US News, it is revealed that 8 out of 10 of those who set resolutions fail by February. That means if you will set resolutions for yourself next year, you have to make sure that you can see it to the end.
Tips to strengthen your financial position next year
So how can you strengthen your personal finances for next year?
Draft a revised budget
It is usually a good idea to start with your personal budget plan. It does not matter if you already have a plan or you have never used one. You need a new budget plan if you want to keep your finances up to date. Check out your income and expenses. Maybe there are new expenses that you need to reconsider. Or there are payments that you need to update. In case you have a new financial goal, this is a good time to include it in your new budget plan. This will help you plan how you want your finances to flow next year. If you find something that needs improvement, this is a great time to identify it.
Adjust your financial goals
It is always a good idea to align your financial goals with your budget plan. By creating your budget for next year, you get to understand your financial capabilities. You can determine if you can add more financial goals or if you can improve existing ones. By setting goals for yourself before the end of the year, you can start working on them as soon as the next begins. You will not be wasting any more time or money investing in something that you know will not lead you one step closer to your intended goals.
Look for ways to earn extra money
If you want to strengthen your finances, it is also a good idea to increase your income. Having more money coming in will give you more resources to reach your goals – or at least make improvements where they matter. You have to make sure that next year will be a year of improvement in your finances. Having more income will make this easier. Of course, it is still important to make the right decisions about what you will do with the extra money. But you still have to earn more and implement the right financial habits so you can use it wisely.
Guard against impulsive buying
According to a study, 6 out of 10 Americans make impulse purchases once a month – at least. Those who admitted to impulsive buying habits mentioned that they regret the purchase after it happens. While giving in to impulsive buying habits may seem like a form of therapy, the consequences are sometimes not worth it. You have to realize that planned spending is the best way to protect your finances. It will keep you from overspending. Not only that, it will force you to think before you spend on anything. That is always a good thing because you get to view your options before you actually spend.
These are only a few of the things that you need to take care of. There are other tips that you can follow in order to strengthen your finances to better survive the challenges next year.
Potential problems that can weaken your finances
While there are many things to do in order to prepare your finances before the end of the year, there are also a couple of habits that you need to avoid to support your goals. There are certain habits that can threaten your financial security if you are not careful. Most of these are actually applicable next year – but it would be better to start doing them now.
Giving in to debt early in the year
The first problem that you need to head off is using debt early next year. Sometimes, we all go crazy during the holidays that we end up spending all of our available cash. While waiting for the next paycheck to arrive, you are forced to use credit to help you survive. This is a common cycle that we need to get rid of. It is not that hard. Just make sure you put aside enough cash to last you until the next paycheck. Keep it where you know you will not use it. That way, you can go crazy with your expenses and still be secure in the fact that you have some cash left behind.
Spending money even before you get them
This is the bare basic definition of debt. You are spending money that you do not have. Unfortunately, this is a habit that a lot of Americans are guilty of doing. Apparently, almost half of Americans admitted that their expenses are greater, if not equal, to their income. We all know that if you spend more than your income, that is most likely debt that you are using. While debt is not totally bad, you need to make sure that you do not abuse it. Having too much debt can ruin your financial future. Not only that, if you have too much debt, it will plunge you into a life of stress that can even compromise your health.
Taking your health for granted
Talking about health – this is another thing that you need to work on. While it is not directly associated with your finances, it does have enough power to pull your finances under. It does not matter if you strengthen your finances. One sickness or trip to the emergency room can leave you with a lot of medical debt. With the high cost of getting adequate health care, this is one part of your life you do not want to leave to chance. So instead of worrying about the cost, just make sure you live a healthier lifestyle.