At the start of the year, a financial diet might not be on top of mind but will it help you manage your finances better?
A New Year’s Resolution is a common list for a lot of people they put together for the year. In it, it covers all the things they want to work on for the year. It does not have to revolve only around your finances. In fact, a lot of people usually have their health on top of the list. It can be losing weight, eating right, or finally putting in time for a daily exercise routine. Do you have that on your list as well?
The main reason for this is that the holidays usually meant having several parties to attend to and plenty of food on the table. Though the pandemic surely changed all of that, food was still an inevitable part of the celebration. You might have taken on weight the last few months of the year. This is the reason why you want to lose weight early this year. But there are a lot of other “diets” you can take on this year. But let’s take a look at your finances first.
And with the pandemic rippling into personal finance which led to people having a difficult time managing money, a diet in terms of your finances might be on the books for you this year. This can cover several areas in your money management but it boils down to one thing – you need to get better control of your finances.
Much like how you would diet in an effort to lose weight, the same thing applies to your finances. You start to look for ways to lower down your expenses to save more money. Doing this gives you the chance to put more into saving or payments. You have the option of prioritizing one over the other or manage your finances in a way where you do both.
This also means making better money decisions and not just cutting down your expenses. You might have lowered your expense but you do not have a plan for the amount you saved up. It ends up inflating your lifestyle rather than your savings. Be smart with how you make the most of your money so you strengthen your finances in the process.
Social Media Diet
Apart from a financial diet, it can also help if you go on a social media diet. This is true especially if you have a habit of checking your social media feed every minute. You might be telling yourself that you are just checking on your friends especially now that you cannot go over and visit. But you might not realize that you are already hooked to your social media apps. Worse, you could already be trying to keep up with the Joneses.
You might just be going around one app after the other trying to check on your friends and people you follow. The next thing you know, you have not been able to accomplish anything throughout the day. If you work from home, this is a definite distraction unless it falls under your line of work. You keep checking your phone and only put in a few hours of actual work.
It is not bad to check on your friends but if you are doing it several times a day, you need to rethink your social media use. Focus on work first then check up on your friends after. You might start to feel like you need to catch up with everyone else’s lifestyle and begin spending more than you should. Be careful with this lifestyle because not everything you see on social media is true.
Of course, when you take on a financial diet, monitoring your food intake seems like a logical addition. This is where you try to watch what you are eating and try to manage your weight. But remember that as much as your health revolves mostly around the food that you eat, you also need to put in a decent amount of exercise each day.
You do not have to spend hundreds of dollars to get started with a healthy way of life. What you need is determination and a program you can stick to. For one, you can easily cut out junk food and sodas from your diet. The Heart Foundation shared that you can expect to have more energy when you start to ditch junk foods. You then add an exercise routine for just a few minutes a day. This depends on you if you want to do it first thing in the morning, during your lunch break, or even at night.
When it comes to your health, the food you eat is a big part of a healthy transformation. Choosing healthy alternatives rather than snacking on junk food is a great start. Depending on your age and weight, and health condition, you can slowly transform your meals to give your body the right amount of nutrients, vitamins, and minerals it needs to stay healthy.
When you go on a financial diet, it sometimes helps lower down your stress especially if most of the things that keep you up at night revolve around money. Your stress can directly be connected to either your money or health and if left unchecked, your stress can manifest into physical, emotional, and even mental problems.
If you are too stressed out, you can start to lose sleep. This can lead to anxiety attacks throughout the day. It is also possible that if you begin to feel like there is no way out of your situation, depression can set in. Dealing with stress and mental problems does not come with a straightforward set of things to do. But there are tips to help you manage through it.
You need to acknowledge the problem and get to the bottom of it. It is important to treat the problem at the source and not just remedy its effects. If you cannot do it on your own, there are professionals you can work with to help you get back on track. Stress is manageable but you might need to change a number of things in your life to make it happen.
What to focus on with a financial diet
Now that you have an idea of other areas in your life you can put on a “diet”, how do you exactly accomplish that with your finances? Here are a few things to focus on if you want to manage your money better.
Creating a budget
You need a comprehensive household budget if you want to improve your finances. Having important information on your income and expenses anytime you need it gives you leverage in decision making. You can quickly make adjustments on where to pay extra or where to save money if you have a detailed and up-to-date budget.
Of course, you need to lower expenses when you are on a financial diet. Your budget can help you determine where you are spending the most and it is up to you to decide where you can make adjustments. If you are spending too much on food, can you cook your meals at home? If your vehicle is costing you more in the long run with repairs, why not sell it and buy a second-hand car? CNBC shares that the main idea is to have more money coming in than money going out.
Create a repayment plan
When dealing with your debt payments, having a repayment plan will help you focus your efforts and help you pay down your debt faster. Regardless if you want to focus on high-interest payments first, accounts with the smallest amount to pay, or even taking on debt consolidation, stick to your plan to see the results.
Pin down your financial goals
When you decide on making changes to your finances at the start of the year, make sure it is aligned with your goals. They need to lead back to help you get closer to your long-term goals. If your goal is to retire early, changes in your finances need to include saving for your golden years. Are you looking to pay down the house early? Then you can divert extra money to making extra monthly payments or even principal payments to help you pay off the house early.
A financial diet at the start of the year is a great concept and going through with it can yield great rewards. You just need to have a plan and be able to stick to it until the end.