Financial Preparation for the New Year
As a you welcome the new year, and plan and prepare for your new year’s resolutions, take a moment to evaluate your finances and put a plan in motion to make some adjustments or improvements to your financial goals. To plan for financial improvement this coming year, here are some tips to get you started:
Adjust your budget
A budget is a plan that starts with your income and your fixed expenses, such as your mortgage, insurance, and utilities. It is meant to incorporate your savings goals, and the remaining money is designated for your other expenses. Now is the perfect time to assess last year’s budget or create a new one. Evaluating how you spent last year’s money will help you make better financial decisions for the year ahead. Make sure to include a method for tracking your spending. Even with a solid plan, there’s bound to be surprises along the way, so make sure to build an emergency fund in your budget.
Plan to meet your goals
Consider how you will accomplish your goals. You might have shorter-term goals, such as purchasing a new home, as well as longer-term goals, like retirement. Each set of goals requires different kinds of planning and saving. Financial planners recommend setting up a separate savings account for each goal, so the progress to the goal is clear. Working backwards to determine how much you need to save for each goal is the best method. By doing so, you’ll determine the cost of the goal first and then establish a reasonable timeframe on how much you’ll need to save each month to reach it.
To secure your financial future this year, identify your wants and needs. Your needs are necessary for survival, like food and shelter. Your wants are simply things you desire, like a luxury car. Tend to your needs first. Then, if there is money remaining, consider your wants.
Maximize tax contributions
Tax deductions can be a valuable source of savings. If you have employer-matching funds available, take advantage of them. Also, verify with your Human Resources contact and your accountant that you are contributing the optimal amount to your 401(k) and IRA.
These are just a few of the many ways you can prepare financially for the coming year. By paying attention to some of the overlooked details, having perseverance and mindfulness throughout, you’ll establish a strong foundation and positive outlook.