It is that time of the year again when everyone is making resolutions to become better in the New Year. As you look over the past year, one of the resolutions that you can make is how to be closer to your financial goals in life.
While most resolutions fail year after year, planning how to make over your personal finances can help you become more optimistic and confident in your financial journey. Planning to achieve your goals is one thing but following your plans to see it through is another.
No matter how much you want to put your financial life in order, if you don’t have the right money mindset, you will always go back to your bad habits.
Start the year right with the right attitude and perspective in wealth-building if you want to succeed and achieve your financial goals in life. How much should you save and how do you grow it by investing? How do you budget your expenses and commit to it?
Achieving your financial resolutions is a process. It is not something that happens in one fell swoop. It may take some time for you to really get used to it but once you have acquired it, you will have better control of your money.
Are you ready to be financially fit? Here are five suggestions for money resolutions everyone can follow this 2018:
1. Create realistic and doable money goals
Goals must be measurable and achievable. There is nothing wrong with thinking big but if you set your goal too high, you may get easily discouraged. Setting your financial goal is the first step to getting yourself financially organized. How much money do you want to earn in 2018? What steps do you intend to take in order achieve it?
Make your goal attainable based on your financial capability. If your financial situation changes during the year, for example, your monthly income increases or you make a financial windfall, you can always adjust your goals higher.
You can break down your goals into short-term and long-term to make them more manageable. Once you have identified them, it will be easier for you to work on them one by one.
Short-term financial goals that can be achieved within the year can be about paying off your credit card debts, saving an amount for investment or annual family travel budget this summer.
Long-term financial goals, on the other hand, include savings you need to attain to start a business, pay for your children’s education plan or for your own retirement.
2. Create ways to increase your income and boost your cash flows
When you have identified your money goals, you must find ways to finance them by looking at your regular savings and cash flows. How much do you need to save regularly from your monthly income? Do you need to pay off some debts to increase your monthly cash flows?
Maybe you need to set aside a certain percentage of your monthly income. Let’s say 10 percent and transfer it automatically to a separate account every time you receive your income before you spend the rest.
If you think that your current income is not enough to enable you to achieve some of your money goals this year, you must look for other sources of income to boost your cash flows.
You can look for part-time work on weekends. Or if you have some good business ideas that may not need so much capital, you can try to start up a small venture.
3. Create a monthly budget to keep track of your target savings and expenses
A budget doesn’t have to be complicated. Develop a simple budget that you can live with. One that can help you track your spending and saving priorities.
When you make your budget, identify your monthly expense items and put a budget on each. You can make a simple monthly projection for the next 12 months on how much money you will most likely spend for the whole year.
This year, keep track of all your monthly expenses and compare it with your budget. Evaluate the variances and determine the causes for such differences. Having a budget will help you focus on your financial priorities. You may not be able to comply with your budget completely but it will at least help you keep your spending in check.
4. Create investing strategies to grow your savings faster
The key to building wealth is not in saving and keeping your money in the bank. It is by growing your money through investing. When you invest, you can grow your savings by earning passive income, which you can reinvest to grow your investment or by earning capital appreciation, whichever you find comfortable.
Your investment options can range from fixed income instruments to real estate. For example, you can invest a portion of your savings in bonds that pay you a fixed interest rate over a number of years. You can also buy some stocks, preferably blue chip and some dividend-paying stocks. You can also invest in real estate condominium for rental income.
In investing, there is always risk that you will lose money. So make sure that when you create your strategies, you know how to diversify your investments to manage your risks.
5. Create a personal growth plan to boost your earning capacity
Many people would rather sit down and wait for opportunities to come to them than go out and look for it. If you want to grow financially, you must find ways to increase your opportunities to make money.
Your personal growth is your personal responsibility. Create a personal development pathway for the year. For example, you can enroll in seminars on marketing practices during the first quarter of the year. Then in the following quarters, you can schedule to attend courses on finance or general management.
When you attend seminars, you also get to know more people, which allows you to increase your network of contacts. Attending professional development courses helps you increase your earnings potential by becoming more marketable. If you are entrepreneurial, you can also get more ideas and get more opportunities for collaboration.
With regards to your personal finance, perhaps you may need to have a mentor who can help and guide you monitor your money resolutions. Get someone who is competent to advise you, someone who is independent and qualified such as a Registered Financial Planner.
Henry Ong, RFP, is president of Business Sense Financial Advisors. Email Henry for business advice firstname.lastname@example.org or follow him on Twitter @henryong888