As we celebrate the end of one financial year and the beginning of another, it is an exciting time to have the opportunity to review, renew and reset financial objectives. Many of us are preparing ourselves for the unique tradition of New Financial Year resolutions, much like our New Year’s resolutions, these financial resolutions are commitments we make to ourselves to improve our financial habits, build wealth, and achieve financial security. This year, why not make a promise to yourself to do things differently?
1) Reflect on the Previous Financial Year
Start by looking back at your financial journey over the past twelve months. Review your expenses, savings, investments, and any outstanding debts. What were your financial wins and challenges? Understanding your financial performance for the past year is crucial to identify patterns, habits, and areas of improvement. Did you save enough? Were you able to stick to your budget? Did unexpected expenses pop up? The answers to these questions will shape your strategies for the new financial year.
2) Set Clear Financial Goals
With your reflection in hand, it’s time to set your goals. What do you want to achieve financially in the new fiscal year? Perhaps you want to pay down debt or save for a house deposit. Be specific (S) with your goals and make them measurable (M) , attainable (A), relevant (R), and time-bound (T) ie SMART. For example, instead of saying “I want to save more”, specify “I want to save $10,000 by the end of the financial year”.
3) Develop a Robust Budget
A budget is your financial road map, guiding you towards your goals. Creating a realistic budget and sticking to it is paramount to financial success. moneyvase will automatically send you a reminder notification once your spending is more than 50% of your budget.
Evaluate your past year’s spending habits, identify areas where you can cut back, and allocate funds towards saving or investing. Your budget should cater to your lifestyle but also encourage a balance between spending and saving.
4) Automate Your Savings
One way to make saving easier is to automate it. Set up automatic transfers from your everyday account to your savings account every time you receive your paycheck. This “set it and forget it” approach ensures that you’re consistently saving without having to think about it.
5) Pay Down Your Debt
Paying off debt can feel like a mammoth task, but it’s an essential step towards financial freedom. If you have multiple debts, consider using strategies like the ‘debt snowball’ method, where you start with small debts and work your way up, or the ‘debt avalanche’ method, where you pay off debts with the highest interest rates first. Consolidating your debts into one loan with a lower interest rate could also be an effective way of managing them. If you can, aim to pay more than the minimum repayments each month. It’s not an overnight process, whatever method you choose, every dollar paid is a step closer to financial freedom..
In conclusion
Financial resolutions might be challenging to adhere to, but the outcome is rewarding. Remember, each financial year is an opportunity for a fresh start. It’s an occasion to reflect on your financial health, rectify past mistakes, and plan for a prosperous future. In the end, it’s not about the speed at which you reach your financial goals, but the consistency and determination you put into achieving them.