The best financial start to the New Year
8 steps to have the best financial year of your life
The new year means you can create a new you – or keep building on the foundation you already have. To help you on your way, here are eight steps to ensure you have the best financial year of your life.
1. Get inspired
“The best time to plant a tree was 20 years ago, the second-best time is now.” – Chinese proverb
Without inspiration none of the steps below will work. You need great goals – dreams with a deadline – to spur you (and perhaps your family too) on towards success. Depending on your personality and situation, you might be inspired by:
- Security and safety.
- Meaningful experiences such as perhaps travel or early retirement.
- Dreams of achievement.
- Other people, such as those who demonstrate self-control. To explain: self-control is one of the most valuable traits that a person can have on the road to financial independence, but until recently it hasn’t been a trait typically praised by popular culture or social media. However, nowadays topics such as meditation, minimalism, and stoicism are becoming more mainstream.
- …rather than dreams of possession and consumption. Too many goals of this nature will often fall by the wayside.
As no two people are the same, you should seek and find inspiration in a way that suits you. Once you’ve got it, be sure to write your goals down.
2. Review your finances
Once you’re backed by inspiration and know where you want to be, the next step is to do a run-through of your finances and get an idea of where you’re currently at.
A few essential questions to ask yourself:
- If you changed nothing, would you be on track to meet your financial goals in 12 months’ time?
- Were there any personal changes over the last year, such as your family, personal circumstances, location, living arrangements and goals?
- Were there any financial changes over the last year, such as your income, bills, expenses, insurance, investments, debt and savings?
- What areas need more focus and improvement?
3. Earn more
Who wouldn’t want to earn more this year? By simply earning more money, it can allow you to achieve so many other goals. There are many ways to earn more money:
- Focus on advancement at your full-time employer. Especially with the pace of technological change, some of you may need to consider a change in employment or even a change in industry.
- Grab a part-time gig to make the most of your free time.
- Start a “side-hustle”. This could be just about anything, for example: freelance writing, driving for Uber, listing a spare room in your house online, start a blog, dog-walking, etc
- Sell spare household and pastime items.
If you’re retired already, then earning more may mean investing rather than having funds sit idle in bank savings accounts and term deposits.
4. Spend less
This is a no-brainer, but we thought we’d mention it anyway! For some tips of what to save, look at the 25 worst ways people waste money.
5. Invest in yourself
Investing in yourself is essential to growing and almost always pays off. There are many ways to invest in yourself. Some include:
- Attending a conference.
- Obtaining a certificate or other qualification.
- Take a course online.
- Getting a mentor.
- Join a mastermind group.
6. Remember to give
While your budget may be stretched at this time of year, giving to worthwhile causes should always be kept in mind and offers many benefits, including:
- Makes a positive impact in the world.
- Makes you feel good.
- Can strengthen your personal values.
- Can help your family members, including children, practice gratitude and see the benefits of generosity.
- To grow your income, as studies have shown that giving money does actually influence your income.
7. Protect your family and yourself
How you protect yourself will vary on your circumstances, for example:
- Everybody needs an emergency fund that can be accessed at short notice without disturbing long-term investments. The usual guideline for this is to ensure the contingency fund equals three to six months’ worth of household expenses.
- If you have reason to preserve wealth, family trusts are still the best way to protect assets, though they don’t work in all instances and do have drawbacks.
- If you have anyone who depends on your income you probably need insurance policies such as life and income protection.
- If you’re self-employed or running a small business, you probably need a range of risk management measures.
8. Act immediately
Reviewing all the points above means nothing if it’s not backed with action. To get things underway you need to act right now.
Just remember that you don’t need to be too strict on yourself, either — it will only create unnecessary stress and disappointment. Instead, start with some little steps now and start making better daily choices which will snowball over time.
The bottom line
Let’s recap the eight steps to ensure you have the best possible start to the new year:
- Get inspired!
- Review where you are now
- Earn more
- Spend less
- Invest in yourself
- Remember to give
- Protect your family, and yourself
- Act immediately