There is no doubt that the new year brings with it a sense of renewal, hope for a better life that spurs us toward New Year’s resolutions and annual tasks.
When you resolve to get healthier, you make your annual appointments with physicians, dentists, and optometrists. When you resolve to lose weight, you adopt a new diet and exercise plan. When you want your finances to improve in the next 365 days, you need a new and more effective financial plan.
Starting a new budget for the new year shouldn’t be as easy as copying from last year’s template or systems. You need to review your financial picture and make a plan to improve your bottom line by year’s end.
Here are some things to consider as you make your financial goals for the year ahead.
Make a move toward your future
If your immediate needs are met by your regular income and you get a Christmas or end-of-year bonus, you should consider throwing that extra chunk of change into your savings account or retirement fund. Start your year off right by making a large contribution toward future goals, then keep that momentum going with a refreshed budget and savings plan.
Review & renew your budget
Many households are still trying to wrap their heads around the new normal that is being borne out of the pandemic that is still raging across the globe. Some budget items will need to be increased due to lack of supply hiking up prices, in addition to the normal inflation that must be accounted for year after year.
Your goal here is to simply ensure you are giving essential necessities the attention they deserve. Make sure that your immediate needs are going to be met by giving them an appropriate budget. When needed, lean your educated guess of expense amounts on the side of caution.
A new year can also serve as an opportunity to revisit your checks. As you balance your checkbook from the year prior, notice if you have enough personal checks to get you through expenses for the year ahead. If not, now might be the time to purchase fresh ones.
Increasing expenses in some categories can make your budget seem daunting and impossible after updating it for higher prices and inflation. You can ease some of that financial stress by slashing non-essential purchases.
Don’t get rid of everything though – you still want to enjoy life. Moderation is key. Instead of having four streaming services, cut it back to two and alternate them as new shows and movies drop. Instead of dining out two nights a week, make it one.
Boost your income
Your budget might be looking pretty sad at this point, and you might feel the need to find some extra income to maintain your desired lifestyle. Start by asking your boss for a raise. With many companies hiring newbies at higher wages, loyal and experienced employees have more pull to ask for better pay and benefits.
If your boss isn’t handing out raises at this time, use those same skills and talents to work as a freelancer. This has always been an option, but the pandemic has made it common, as well as other types of gig work.
Automate your finances
Many banks are starting to offer more comprehensive money management apps and tools, but even if yours isn’t one of them you can automate much of your finances. Third party money management apps have made it easy for the average person to keep a reign on their finances with automatic bill pay, expense tracking, and budget monitoring. Many of these can also be accessed via the web for power users.