It’s that time of year again; with 2015 coming to an end it’s time to start planning ahead for what 2016 has in store. Everyone looks at New Year’s resolutions differently, whether that is to get into a new habit or break a bad one as long as you’re following through on them is considered a success. But what about setting financial resolutions? Have you considered working on something that will benefit your overall financial situation? Many financial timers reset on January 1st, so this may be the year to create a New Year’s resolution focused on your money and we give you a few different ways how you can achieve that goal in 2016.
Review Your Current Situation
Start with the basics, as this will be the first step you need to take in determining what financial goals to make for your New Year’s resolutions. Assessing your financial state can help determine where your spending and whether you are standing in the red or in the black. Looking at last years spending is one way to verify where your money is going, and can help to reprioritize your spending to meet your financial goals. Set up an appointment with your financial advisor, as they will be able to assist in giving you a financial overview and help determine what your next steps should be.
Create A 2016 Budget
There is no need for a complex budget spreadsheet, it is taking a look at last years spending habits and seeing what you have to work with for this year. There are many online tools and mobile apps that can help with this, including Google Docs, that has many templates readily available for you to use. Mint is also a mobile app that is available to create alerts and notifications for your spending habits. It’s a customizable app that brings your finances to one place and lets you categorize and track your money based on your spending. A great feature to this budgeting app is it will send you notifications and alerts if you are close to going over your set budget in any category. Laying out where your spending is going is a visual way for you to see what your money is really going to, and where you can adjust moving forward.
Now that you can see where your money is going and ways to adjust your spending for the New Year, now it’s time to reallocate funds. Get on top of any debt that you may be carrying, starting with things like credit cards and working your way up to bigger things like your mortgages. Start small, you will be pleasantly surprised what adding an extra couple of bucks to each of these payments can do to whittle down the outstanding balance. Remember spending and saving work the same, they both add up.
When it comes to money, having an emergency fund is essential for anything life may throw at you. We’ve previously discussed how to be financially prepared for the unexpected, because whether you’ve been let go from a job, an illness occurs, an accident happens or even something positive like a pregnancy surprises you, no matter the situation, you should always be financially prepared. Start with small contributions, treating your emergency fund as a bill and getting into a routine of contributing funds are only some of the small steps that can make a big impact in the future. And remember that everyone’s emergency fund will be different depending on his or her situation.
What financial New Year resolutions will you be making this year? Let us know in the comment secion below.