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How To Make Sure Your Finances Look Completely Different One Year From Now
With a simple three-step plan
There’s never a bad time to make steps to overhaul your finances, but the start of a new year is a particularly good one. If you’d like your finances to look a whole lot better by the end of the coming year, follow this three-step plan.
Have a Huge Tidy Up
It’s easy to let finances get messy, so the first thing to do is take a step back and assess the big picture. List out your most important numbers such as:
- Income
- Outgoings
- Savings (including interest rate being earned)
- Debt (including interest rate being paid)
- Investments
- Net worth
If your income is inconsistent, note down projected income for the next 12 months as well as some income goals that you’d ideally like to hit.
Once you have an overview of your finances it’s easier to see how you can improve things.
Set Your Goals
These will be personal to you but one important aspect of them is they should be specific, and include the “How” as well as the “What.”
If you’re increasing income, how are you doing that, exactly? Note down the actual daily, weekly, and monthly actions you need to take to reach those income goals.
If you’re aiming to save more, then which expenses will you cut? Investing more this year? Where’s that money coming from?
If you have debt to pay down, how will you do it? Avalanche or snowball method? Do you need to consolidate debt first? Or maybe move consumer debt to a 0% credit card.
Are you missing out on any tax benefits? Could you be paying into a Health Savings Account, for example or an FSA to help with childcare. (These may or may not apply to you right now — just check out anything that you could be doing to make sure you’re not missing out.)
Look at the small stuff as well as the big. Is your home pretty cluttered with stuff you just don’t need right now. How about selling it? Where would you do that? How much could you…
