How are you currently doing on your new year's resolutions? We promise not to judge. Did you know that 80% of people ditch their resolution by February?
Financial resolutions are the most prominent resolution, but we hardly make it to the end of the year with everything on track. So how can you achieve our goals during a pandemic?
One of the main causes that make people ditch their financial resolutions is that their goal is unrealistic. Furthermore, not having a solid plan in place on how you will go about achieving your goal is a recipe for disaster. We break down a few practical tips that can get you back on the bandwagon to working on your financial planning.
Before we start
Keep in mind that your financial situation is different from the next person along with your financial goals. This is a part you do not want to skip. It is important to get a clear picture of where you are at now by assessing your bank statements to see how much you spend and what can be adjusted. You can also speak to a financial advisor who will help you set out realistic ways to reach your financial goals without putting a strain on your finances.
Saving during a pandemic
Saving more is the top financial goal many people list as part of their new years resolution. However, this is a goal that ends up falling by the wayside or being used for emergency expenses that leave most people's finances in a critical condition. So how can you do this during a pandemic. The key is to set S.M.A.R.T targets for your finances:
Specific. Know what you want to save for. Is it an emergency fund, a buffer for unemployment, investing, or purchasing of assets?
Measurable. This can be related to the monthly contributions along with the type of interest you would like it to grow by. Numbers are important. Therefore, you will need this to be accurate down to the 'T' to avoid any surprises.
Attainable. Is your saving goal something that you can realistically achieve? If so what will you need to adjust to make sure that you achieve this.
Relevant. Always look at the reason why you are saving. Can what you are saving towards better your life? Will you benefit from it in the long run? Is it needed?
Time-based. Setting a realistic time frame can give many of us the discipline we need to achieve our financial goals. Furthermore, it will ease the financial pressure once we know how much we can comfortably contribute monthly before our time has come.
We live in uncertain times, which means that financial management is needed more than ever. Being able to reduce any form of debt during this time is crucial to avoid being financially exposed. The rule of thumb is to pay off more than what is required when you are doing good financially to ease the pressure when you are in a tight financial spot.
Snowball your debt by paying off the small debts and gradually working your way to paying off the larger ones. Try by all means to avoid taking on new debt as this can derail your process.