The beginning of the year is the perfect time to start thinking about what kind of year you want to have. Your plans this year might be traveling, school, maybe getting married or more simply, getting out of debt.
Unfortunately, none of the plans or ideas you have for what kind of year it should be can be complete without the financial might to match it. So before you go thinking up any more plans, let’s think about how you will see them through without going broke this year.
At the end of a year and beginning of a new one, many of us think out with the old, in with the new without any commensurate execution or implementation to see this become reality. This is the case with many plans and it’s even worse when it comes to finances. There are a lot of grandiose financial plans made but by the time the year kicks in and life catches up, most of those plans fall away forgotten. Your main financial goal becomes staying afloat and just making ends meet.
If you would really like to take charge of your finances and make a change this year then you need to figure out the things that might leave you broke this year and take the right steps to change them.
A major problem for most is excessive indulgence in leisurely pleasures which tend to add up and end up costing a lot even if on the surface, each activity has a small charge. This year, pick up your bank statement or tally your expenses and try to figure out what you spend money on, what is really needed and what is an excess. Take conscious and necessary steps to cut out all the excesses.
Lack Of Savings And Emergency Fund
It is absolutely necessary to build and grow your savings, investment portfolio and an emergency fund. If a big expense or emergency comes up sometime in the year, you might find yourself broke even though it looked like you were doing well. A way to guard against this is ensuring you at least have savings and an emergency fund. You can channel some of the costs cut from your usual entertainment expense.
Living Above Your Means
A trap most fall for is trying to live a lifestyle above their means and income. While you might be partial to having the trendiest and luxury items, your finances might not be at the stage where this is feasible. It is important to assess your financial situation and live comfortably within, or even below your means. It might help you achieve your financial goals if you are proactively frugal.
Another thing that can put you in a financial mess is having misplaced priorities and spending on the wrong things. Make a list of everything you need and want, then do them in the order of importance. Otherwise, you might find yourself having spent on the unnecessary and still having to spend on the important.
Living On Credit
A killer habit is living on credit, giving you an illusion of what you can afford and doing well while you might be racking up debt and getting into financial trouble. Significantly reduce or completely cut out this habit and you will find yourself in a much better place this year.
If you cut out all of these, you are sure to avoid getting broke this year and it’ll bring you closer to your financial goals.