Goals can be set at any given time in the year. But the fresh perspective that a new year brings makes this an opportune time to consider what you would like to see in your life including your finances.
PERSONAL FINANCE IS PERSONAL…
And so, not all of these goals will apply to your personal situation, however , they might offer some guidance on some of the things you might want to start working on.
Build or Replenish your Emergency Fund
This is the cash reserve that’s specifically set aside for unplanned expenses or financial emergencies. Some common examples include car repairs, home repairs, medical bills, or a loss of income. I encourage my clients to have a certain percentage of the emergency fund dedicated towards income loss and the rest towards other kinds of emergencies. If 2021 came with emergencies that resulted in this fund being depleted, build it back up. If you have never had one, this is a great time to start one.
Start Retirement saving or increase the amount
One of the most mind-blowing exercises I do with clients is to calculate their expenses at retirement and compare with the projected pension withdrawals to determine whether they are doing enough today to prepare for retirement. This exercise has a way to jolt you to work towards your retirement goals and you can do it to determine the exact amount to put towards retirement.
Get yourself on a No-Spend Challenge
In its most basic form, a no-spend challenge is where you go for a set period of time without spending any money. How you put this challenge into practise is up to you because personal finances differ from person to person. The goal is to pledge to only use what you already own and cut out all spending for a period of time.
You limit yourself to buying the bare necessities, such as food and necessary personal hygiene products (toothpaste, for example, would be allowed, but a make-up kit would not be). Personal finance journalist, Michelle McGagh took this challenge for a year and wrote all about it. This would be a particularly great challenge if you are a spendthrift.
Apply for a promotion or ask for a raise
If you are having an income shortage in your budget there are only two solutions: reduce your expenses or increase your income. We live in the side-hustle age and almost everyone has one or feels the pressure to start one for additional income. Here is a thought, is your current job able to give you more money? This might be an easier route to take especially if it is the kind of job that will not give you time for a side-hustle.
Get an additional income-Side hustle
If the promotion is not coming and you have time. passion and skill for something else. Do it. Side hustles have helped many people to clear debt, plan for retirement and supplement their income. This might be the time to do some stock-taking on the kind of side hustles you might be able to engage in.
Create a Spending Plan
You have worked for your money. It is yours. You should not be feeling guilty about spending your money. The guilt comes because you spend your money without a plan. A budget is literally a plan for how to spend your hard-earned money. A plan enables you to project your needs and let your money help you achieve your goals while allowing you to live the life you want to live today.
Write a list of your financial goals
Is it an oxymoron to have writing financial goals as one of your financial goals? Some of us just need to have a sense of direction with our money and it will have the most impact. Three to five goals are enough to keep you from being overwhelmed and a good mix of long, short and medium-term goals will keep you well motivated.
Start or increase your investment portfolio
Are you investing? You can start your portfolio with simple and accessible investments like unit trusts. Are you already investing? This could be an opportunity to either increase the amount directed towards investment or introduce a new investment vehicle to your portfolio. You have land sitting idle, can you’d develop it? You have invested in stocks? how about Bonds? You have invested in local stock? how about international stock?
Reduce or get rid of your Debt
One of the best ways to free up your money for investment is to clear your debt balance. This will not only change your bottom line but will also have a psychological impact that will motivate you to work towards your other goals.
Become financially literate
The best way to start making money moves is to know the kind of money moves you can make. Educate yourself on how money works, the psychology of money and your own money behaviours. We live in the information age and there’s plenty of videos, articles and books that you can read. Hire an expert if you need to for the additional one on one help and accountability.
It’s in your control. Pick three out of this list and get started.
Which ones do you resonate with?
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