2021 has been a whirlwind of a year, more so for many of us financially. While some people may want to bid the year goodbye, now is the best time to review your finances to come out stronger next year.
Being financially prepared can help create a buffer between the unexpected and also help you financially plan in a way that will benefit you. These are the five things you can do to help you financially prepare for next year.
Take stock
To move forward you will have to assess what worked and what didn't. It can be overwhelming at first, for some you may need to speak to a financial advisor to get a realistic picture of how you can map your way forward, but it will be worthwhile. Assess your expenses, any debt and the things that have caused you to bleed financially. Remember to be honest with yourself to help you make smart money moves in the next year.
Replace bad money habits with new ones
Having a clearer picture on your financial situation can help you find a way forward. One of these is changing your bad money habits by replacing them with good habits. Keep in mind that this will take discipline and the constant reminder of the bigger picture of what you are trying to achieve financially. Some good money habits are doing things such as:
Tracking your spending
Avoiding emotional purchases
Setting a realistic budget
Setting automatic payments for debits
Reducing any debt
Make sure to check your bank statement for small purchases you may have forgotten that go off each month. Understand your spending habits and work around ways to avoid falling into old habits that end up costing you.
Start setting financial goals
Money that is not planned for is wasted money. Setting financial goals, both short term and long term, can help you make smarter money moves. It can also boost your financial planning once you have a set target. Having financial goals will also help you come up with creative ways to start earning more if your goal requires you to have more funds. As much as having a goal is crucial, it is also important to remember to set goals that are realistic to your current finances so that you do not stretch yourself thin.
Invest & protect your finances
Avoid making the common mistake that investing requires you to have large sums of money stored. Always start small, with what you can afford, and gradually work your way to diversifying your investment portfolio. Investments could be things in the form of trusts, shares, taking out a life insurance policy and planning for your retirement. Find what works for you financially by speaking to an investment manager who will assist you in investing your money.
Finances are a moving target that will require you to adapt and focus on the big picture. Always keep in mind that your financial journey is different from the next person. Therefore, brushing up on your financial skills can be beneficial in the long run.
