A new year can mean a fresh start in many areas of life – including the area of money management. If one of your New Year’s resolutions is to have a financial makeover, you’ve come to the right place. Here are five money moves you can make that will help you to have your best financial year ever.
Create a Financial Plan
A successful financial year begins with a great plan. You can create a simple, yet effective, financial plan at your kitchen table with a notebook, a pen and Internet access. Here are the steps you need to take to create your financial plan:
1. Start by considering your financial goals. What’s important to you in life? How does money relate to your highest priorities? By determining what it is you want out of life and how much money it will take to achieve those goals, you can begin the next step in creating your personalized financial plan.
2. Assess your current financial situation. Write down every asset and liability you own, and from there determine your net worth. Having a clear picture of where you’re at financially will help you determine how to get where you want to be financially.
3. Map out a path from point A (where you’re at financially) to point B (where you want to be financially). Determine what you need to do to reach your goals (dump debt, increase retirement savings, downsize your home, etc.) and set a plan in place (commonly called a “budget”) to do so.
By creating a simple financial plan, you’ll do wonders in making your money do what you most want it to do in your life.
Start Thinking Big Picture
When managing money, too many people think short term instead of big picture, thereby squashing their financial goals and dreams before they even begin to achieve them. For instance, they squander $30,000 of hard-earned income on a brand new car instead of investing that money for a plush retirement.
Or they make takeout meals a way of life instead of cooking at home and using that money to save for a down payment on a home.
The Solution
When making daily spending decisions, gauge the value of the dollars you’re about to spend against your financial dreams and goals. Will that daily latte truly bring you more joy than being able to retire at 60? Will that brand new car be worth the opportunity cost you’re giving up investment-wise?
When you start considering your short-term, immediate gratification purchases against the background of your greater dreams and goals, you’ll begin to realize how little joy those purchases bring you. As a result, you’ll begin making spending decisions that bring true, long-term value to your life.
Educate Yourself
The Internet and your local library offer a college degree’s worth of education on how to grow your wealth and reach your financial goals. As you work to make 2016 your best financial year ever, choose to turn off the television, set aside your smartphone and spend an hour each day educating yourself on successful personal financial management. The benefits you reap will be priceless.
Surround Yourself with Like-Minded People
If you’re working toward a financial goal of debt freedom or financial independence, it’s important to surround yourself with people who are striving toward those same goals. Hang out only with perpetual spenders, and you’ll likely be drawn back into a life of mindless spending. However, if you find people to spend time with who have your same goals in mind — whether that be people in real life or online via financial blogs and Internet groups — you’ll gain extra momentum for changing your financial picture big time.
Choose Perseverance
Once you have a solid plan in place for reaching your financial goals, success lies simply in the form of perseverance. Don’t let yourself get distracted from your plan by new and shiny things or by short-term rewards. Instead, keep your eye on the prize (the achievement of your biggest financial goals) while still living life in a way that brings you joy. Life goes by fast, and with a solid plan and the willingness to persevere in achieving that plan, you’ll find you’ll reach your financial goals in no time.
Choose to not be among the 80 percent of people who fail at keeping their New Year’s resolutions. Instead, make a rock-solid commitment to staying the course until you’ve achieved your dreams. You deserve it!
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5 Ways to Make 2016 Your Best Financial Year Ever originally appeared on usnews.com
