How to start 2024 on the right financial foot

The new year is a great time to set new financial goals and adopt new habits to reach them. Planning ahead is perhaps the most important among these habits.

Before we go into your aspirations for the new year, let’s focus on your finances. Proper financial management serves 3 purposes. Firstly, it allows you to cover your daily expenses. Secondly, it provides you with a safety net. Lastly, it helps you achieve your financial goals. Now, let’s embark on preparing for the new year together.

Do you remember the goals you set last year?

Reflect on the financial goals you set last year — how many have you achieved? If you’ve accomplished all your goals, you deserve a round of applause! Now, it’s time to set new financial goals, taking into account any changes in your financial situation over the past year.

If you haven’t achieved all of them, don’t worry. It’s not too late. Roll over the goals you didn’t reach to the new year. However, this time, ask yourself: Why couldn’t I reach them? This is where you’ll need to craft a new plan to achieve those goals. For instance, if you want to pay off your credit card balance, consider increasing your monthly payments or not using the card until it’s paid in full to prevent accumulating more debt.

Setting a timeframe for each goal may help make things easier. For example, dedicate the first half of the year to paying off your credit card balance and the second half to a different goal, like saving for a down payment on a new car.

What about last year’s budget?

If you’ve been following our advice, you probably created a budget last year. However, you may need to create a new budget that aligns with your new goals.

When creating a new budget, consider any changes in your financial situation over the past year. For instance, if you get a salary raise, adjust your take-home salary. If you take out a car loan, include the monthly payments in your budget.

By aligning your salary with your daily and monthly expenses, you can calculate your surplus (leftover money). It’s essential to allocate every dinar thoughtfully to avoid developing overspending habits and spending your surplus on things that you don’t need. Instead, leverage it to achieve your future financial goals.

Are you prepared for emergencies?

None of us can predict what the new year holds. That’s why it’s crucial to build an emergency fund. Allocate an amount of money for this fund to cover emergency costs that fall outside your usual monthly expenses, whether it’s a substantial expense like maintaining your living costs during a job loss or a smaller cost, such as repairing a washing machine.

Without an emergency fund, any financial shock, however mild, can throw you off course, have a lasting impact on your financial well-being, and take you a while to bounce back from. In such situations, you may also have to rely on credit cards or loans, potentially adding to your debt, especially if you already have a loan.

For more details on emergency funds and guidance on starting one, read this article.

Did you put your savings from last year to good use?

Stashing your savings away and completely forgetting about them isn’t the most effective strategy. This approach raises the risk of gradually spending them and lowers the chances of growing your wealth. Instead, consider putting your savings in a strategic place to generate more money. After all, who wouldn’t want to increase their wealth?

There are various savings options you can make use of, including investing in stocks, buying gold, opening a term deposit, and more! Explore the options in our article: 7 ways to put your savings to good use.

Where do you stand in terms of financial literacy?

Imagine owning a smartwatch but not knowing how to use it except to tell the time. Would you be getting the most out of this watch? Of course not! The same principle applies to money. If you only know how to spend it, you won’t get the most out of it. That’s why we all need financial literacy.

Financial literacy helps us manage money effectively, ensuring we get the most benefit from it. This, in turn, enables us to achieve financial stability and reach our goals, build a secure financial future, and learn how to leverage opportunities to earn more money.

Want to improve your financial literacy? Check out our article: 6 ways to increase your financial literacy.

Implementing these 5 financial changes in 2024 can pave the way for a more secure and prosperous financial future. By setting goals, following a budget, creating an emergency fund, making the most out of your savings, and increasing your financial knowledge, you set the stage for a successful financial year. These small financial habits can lead to significant benefits in the long run.