Reviewing your spending for the year ahead can be a good way to help prepare for the upcoming fiscal year. Collecting bills, bank statements, and receipts and thoroughly reviewing them can highlight areas of unnecessary spending. Once you are aware of any financial ‘leaks’, they can be easier to avoid.
Checking your credit report can also give you an indication of your financial situation and may help you to make plans for the future.
Evaluate your current situation
After analyzing the past year’s spending and income, there may be some changes you can make immediately:
- Reviewing any direct debits or other payments can help you identify any expenditure that could be cut, which may considerably reduce your outgoings.
- Setting up an emergency fund can help provide stability. An emergency fund can help prevent dipping into other sources of money, such as loans, for unexpected expenditures.
Taking these steps could help you strengthen your financial situation for the upcoming year, make saving easier, and work to give you confidence for the future.
Successfully planning your finances
The reason many New Year’s resolutions fail is because people set unreasonable goals for themselves. A tendency to think in absolutes – e.g. “I will clear ALL my debt” – can set us up for disappointment. This disappointment then leads to negative feelings which make it even harder to stick to our plan.
Thinking about ‘SMART’ goals can help give direction to your financial aspirations and make those goals more achievable.
- Specific – Rather than pledging to ‘save money’ or ‘reduce debt’, thoroughly analyzing finances and targeting specific areas for improvement could boost your chances of reaching your end goal.
- Measurable – Having benchmarks can help you track your progress, letting you make changes if you need to.
- Attainable – Setting a realistic goal can help keep your confidence up as you feel the achievement of getting close to your desired result.
- Relevant – Ensuring your goals are appropriate to what you are trying to achieve can help you avoid wasting time.
- Time Sensitive – If you know when you want to achieve your goal, this can allow you to pace savings and help ensure you put the right amount of money aside.
The benefits of budget planning
Drawing up a budget can help you regulate your spending, monitor your income and expenditures, and find areas in which you can save.
- Gathering all the information on your funds can give you a wider perspective on your situation, which means you can organize your incomings and outgoings and draw a sensible plan to keep control of your money.
- Bonus income can be a tempting reason to splurge your money, but it can also be an opportunity to boost your savings. Dividing any bonus money into past debt repayments, future savings, and spending for the present can be a way to help ensure that it goes to good use.
- Once your plan is complete, recording every outgoing for the first month under the new budget can offer the opportunity to review and make any adjustments.
Regularly revisiting and updating your savings goals and budget plans can help you keep up with changes that occur throughout the year.