As we look back on what has been a rather interesting year, it’s worthwhile to reflect on how you have performed in terms of your financial goals. If you have achieved your goals despite this extremely challenging year – it surely calls for a celebration.
On the flipside, maybe you made progress but dropped the ball along the way, or didn’t really set yourself any financial goals to begin with. In either case, there’s no better time to get started than in the New Year, and no matter what your experience may be, here are a few simple financial resolutions to help kickstart 2021:
Improve your financial literacy
The best investment that you can make is an investment in yourself. As you start the new year, work towards improving your understanding of things like money and investing. There are plenty of resources to choose from – the internet, books, or even casual chats with trusted friends and family. Keep in mind that having access to more money doesn’t improve your ability to manage money. It’s quite the opposite – learning to manage money will drastically improve your chances of making more money.
While budgeting can seem like a difficult task, it plays a vital role in helping you achieve your financial goals. Start by understanding what your monthly expenses are likely to be – taking into account things like accommodation, utilities, food, travel and entertainment. Once this is done, set yourself a monthly limit and keep track of your budgeted vs. actual expenses to identify areas of overspending.
Build a habit of saving
The unpredictability of 2020 has been a great reminder on why it’s so important to have money that is easily accessible. Maybe you went through a pay cut or worse, you may have been laid off. Having savings, especially in the form of an emergency fund, will you help you stay afloat when times get tough. A good practice is to remember to ‘pay yourself first’ and set aside money for your savings at the beginning of the month, instead of allocating what is left over at the end of the month.
Pay off your debt
Paying off debt is a great resolution as you step in to the new year. Paying off your debt allows you to take control of your finances and creates savings in the form of reduced interest payments. It’s a good idea to set up a debt repayment plan, where you tackle high interest items like credit cards first. While paying off debt takes sacrifice, it also provides a great sense of security, especially in times of uncertainty.
Begin your journey of investing if you haven’t already got started. Consider the different options available to you and choose ones that best suit your personal circumstances. We have compiled a number of articles that can help you get started, covering topics such as asset allocation, choosing between asset classes, investment timeframes and the benefits of investing over the long-term, just to name a few.
While it’s important to get started, it’s far more important to make sure that you follow through with your resolutions. Doing this will allow you to take control of your finances, while making sure that you are working towards your goals. Good luck!