Saving more money is the top New Year’s resolution for 49% of people. But, in order to keep that resolution, you must devise a strategy. If your “new year, new you” strategy includes saving or investing (or both), you should perform a year-end financial checkup before the clock strikes 12. Here’s how to get your finances ready for the new year.
1. Determine Your Goals
What do you intend to accomplish with your money in the coming year? Do you wish to make an investment? Save? Begin budgeting (this time for real)?
You can’t get your money in order if you don’t have a plan.
Be explicit about your objectives.
- How much money do you wish to put aside or invest? $500? $1,000? More?
- What is your target date for achieving those objectives? Is it the end of the year? After six months?
Defining your goals provides clarity, allowing you to know exactly what you want to accomplish. For example, simply stating, “I intend to invest this year,” is insufficient. That’s great, but how much, where, and when?
2. Understand Your Financial Situation
You need to know where your finances stand now that you have some precise goals (or just one goal – whichever works for you) so that you can construct a realistic strategy.
- How much money do you make each month (also known as your income)?
- How much money do you spend on stuff (also known as your expenses)?
Subtract your monthly costs from your monthly revenue to see how much money you have left over at the end of the month. If you don’t have enough to meet your objectives, you at least know how much you need to add or reduce from your budget.
For example, suppose you want to save $12,000 by the end of the year. However, after deducting your expenses from your income, you are left with only $900 at the end of each month. So, in order to meet your objective, you must reduce your spending or find a way to earn $100 every month.
If you don’t know your income or expenses, it’s like tossing a dart blindfolded and hoping for the best (your financial goal).
3. Use Financial Tools and Products
Do you want a quick approach to assess your financial situation? There are tools available to help with this. Budgeting apps and cost trackers will provide you with an overview of your income and expenses. These programmes connect to your bank account and automatically track your spending habits.
Similar tools and apps are available for investing, allowing you to make more informed decisions about how to increase your money.
4. Eliminate Unnecessary Expenses
If your spending patterns still allow you to meet your financial goals for the new year, you may not need to lower your expenses (lucky you!). However, most people will need to take a long, hard look at what they spend their money on each month.
Make a list of your outgoings. What are you able to get rid of? Can you minimize an expense if you can’t eliminate it? Perhaps you can locate less expensive insurance or cancel one of your streaming subscriptions. Finally, if you don’t want to minimize costs, another option is to identify ways to make more money. Get a second job or a side gig to add some extra towards your income and help you get your finances ready for the new year.
In conclusion, getting your finances ready for the new year doesn’t have to be a daunting task. By following these simple steps and tips, you can start the new year off on the right foot financially. So what are you waiting for? Get started today!