Choose one of these five financial goals for the New Year
Written by Carl Turner on January 10, 2017.
Whether you are up to your eyeballs in debt or sitting on a small fortune, there are always improvements that can be made to your financial situation. Why not seize the optimistic New Year vibe and resolve to make one change for the better this year – it doesn’t need to be a big goal - small but realistic works well as part of a bigger picture. Here are some suggestions:
1. Zero your unsecured debts
Make money your master and not your servant by freeing yourself from the slavery of debt. Having debts means paying interest which is wasted money, especially when you could be saving and earning interest instead. Concentrate on getting out of debt firstly by setting up a strict payment plan to prioritise paying off a certain amount each month before you start spending on things you don’t need. Reducing spending will free up money to put towards your debt repayments as will selling off unwanted items and even taking on extra work. I guarantee that when you finally pay off that debt it will be a euphoric moment and well worth the sacrifice.
2. Start budgeting
Budgeting is the key to financial success whether you are managing your own personal finances, a household or a multi-million dollar company. We’ve all heard the sorry tales of riches to rags celebrities like Mike Tyson who frittered his alleged $400mn fortune away on jewellery, a bath worth millions and three white Bengal tigers! Maybe budgeting would have helped him realise just what ridiculous purchases he was making.
Planning where you are going to spend your money and sticking to it will stop you overspending, make you more reflective over what you spend on, highlight areas where savings can be made and enable you to more efficiently manage your financial situation both day-to-day and in the long term.
3. Start saving
Saving is essential if you want to enjoy financial freedom in the future – it allows you to put money aside for emergencies, your child’s education and your retirement. Get yourself into the habit of putting money aside as soon as you receive your salary and before you have the chance to spend it. If you are used to spending everything you earn, find areas where you can cut back such as eating out less often, reducing your grocery bill or changing utility provider. Setting a savings goal will help with motivation.
4. Educate yourself financially
Most people, through no fault of their own, have a woeful lack of knowledge about financial matters which rarely form part of the educational curriculum. The good news is that there is a wealth of free information online which can help you get to grips with your personal finances and how best to manage them. Sites such as Money Saving Expert cover a wide range of subjects from which bank accounts pay the best interest to how to save on death duties. There are also many personal finance blogs which send out newsletters you can subscribe to, or go old school and pick up a book about personal finances.
5. Start investing (better!)
When it comes to saving, your money can earn more if it is thoughtfully invested. Obviously this inevitably brings some risk but you can, and should, tailor your investment policy to your appetite for risk. A financial planner can help, especially if you are just starting out. They will help you clarify your goals and suggest how you can best achieve them. Decide how much you are going to invest each month and go for it!
If you’re already investing, take a look at your portfolio and see if there are improvements that can be made. Remember the key is diversification so be sure to keep it balanced.
Whichever resolution you choose, I wish you all the very best in achieving it this year and hope that come December you will be looking back with satisfaction at the progress made in your financial journey.