Happy New Year!
You know how they say that how you ring in the New Year is a good indication of how your year will be?
Well, that’s probably because many of us wait until we have a fresh start, like that of a New Year, to put our goals into action and start working on our resolutions.
Since we just celebrated the New Year, now is the best time to clean up your finances.
And don’t worry about that saying. If you didn’t ring in the New Year with thousands of dollars in savings, no debt, and a budget, there is always time to get on the right track.
Here’s what you can do now to start the year on the right foot with your money:
Do a Year End Review
It’s difficult to predict where we’re going if we don’t know where the starting line is.
That’s why a year end review is a good idea, financially. Here are a few things to review:
- what you spent over the past year
- whether you had any goals that you set financially (did you stick to them, or stray from them?)
- how much money you earned and from which sources
- whether you bought any big ticket items
- where you had the most fun with your money
- how your investments did, if you have any
- how much debt you paid off, if you have any
Having this information in your arsenal will make the next step of setting monthly money goals far easier, because you’ll have a good idea of where you are financially, including what areas need improvement.
The year end review stage is also a great time to order a free credit report for yourself to review any potential errors on it and get them wiped away before the year progresses.
Set Monthly Money Goals
Do a review of your finances this month to set monthly financial goals for yourself and your family.
Monthly goals are better than yearly goals, because a month is a short enough time that you will actually stick to them. Plus, if you work toward a goal for a month – for example, sticking to a budget or not eating out – you are likely to create a habit around the goal without getting fatigued with the perceived length of the commitment.
The money goals are meant to become habits so you don’t just drop them and go back to your old ways, but setting these goals as part of a yearly plan is a great way to get started.
Maybe one monthly goal is to not eat out for the entire month, and the next month you read three books about investing. Whatever the goal, make sure it’s attainable during that month and realistic.
Revisit Your Expenses
A new year is the best time to review expenses.
After all, the holidays can be expensive, and you’ll have set goals for the New Year so you’ll need to know where your money is going.
Plus, revisiting your expenses will, more often than not, reveal some sneaky bills and services that you have been paying for that you don’t use or don’t need.
Instead of going by memory, check all of your accounts, including credit card, bank accounts, and online payment processors like Paypal to catch any reoccurring expenses that are flying under your radar.
Question every single expense: do you really use the service? If you use the service but also have a goal that you’re working toward, which is more important, the goal or the service? Is there a substitute that may be cheaper that you could use instead, like with your car insurance?
I’ve been able to save hundreds of dollars a month by doing one review of expenses.
Re-Do Your Budget
Over the past year, your budget is almost guaranteed to have changed.
Maybe you’ve subscribed to a service that you didn’t have before, or you got an annual raise, or welcomed a new addition to the family.
Re-doing your budget to reflect reality for the New Year will set you up for success – and a heightened awareness of your financial situation.
Plus, if you have an accurate budget, you’ll be able to make some tweaks to it so you can fit in your goals.
How are you financially preparing for the New Year?
I love the end of the year and the start of a new one, since it’s a great time for me to assess my last 12 months and see what I can improve. I close my ‘budgets’ and prepare new plans for the year to come.
It feels like a fresh start,doesn’t it?
I agree, Tom! Thanks for commenting.