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It’s resolution time.
You know, that time of year when you tell yourself you will lose weight/get fit/write a novel and find yourself two weeks into the new year, your resolve in tatters, slobbing on the sofa, consoling yourself with cake and feeling like a failure!
Apparently, a mere 8% of us manage to keep our resolutions (can you even remember what last year’s were?) but, believe it or not, a study has been carried out concentrating on financial resolutions and it concluded that 51% of those who made a financial resolution at the start of 2014 felt better off by the end of the year.
So maybe financial is the way for you to go this year? Whether your finances are an utter shambles or in good shape, there are no doubt areas where there is room for improvement so here are some ideas:
1. Start an emergency fund – everyone should have one. Set aside some savings which you can dip into should disaster strike and you find yourself temporarily without an income.
2. Pay off your debts – make it a priority to pay off any short-term debts which will be costing you big money in interest payments every month. Target areas where you can make small savings in your life and put the money saved towards clearing your credit card balances – right down to zero!
3. Cut up your cards – Get rid of those cards to avoid racking up any more expensive debt and resolve to live within your means rather than relying on credit. If you can’t pay for something outright, don’t buy it. Just like they did in the good old days!
4. Learn to budget – do you know how much you spend per month? Most of us don’t which means that we really aren’t in control of our finances. Make a list of your monthly outgoings – some will be fixed such as mortgage payments or insurance premiums, others may vary. The important thing is to make sure that what is coming in is greater than what is going out and that you have money left over each month to…..
5. Save, save, save – your financial wellbeing in the future will be determined to a large extent by what you manage to put away now. Big financial goals such as a university education for your child, a deposit on a house or a pension that will see you comfortably through retirement can only be achieved by steady and regular saving. Start now and by this time next year you will have established a habit which will bring immeasurable benefits throughout your lifetime.
6. Set tangible goals – saving is made easier if you know exactly what you are saving for and can measure how you are doing. Rather than resolving simply to save make it specific – ‘I’m going to save 10% of my post-tax income’ or ‘I’m going to save $100 per month’.
7. Protect your family’s financial future – bad stuff happens and sometimes there is nothing you can do to avoid it. What you can do is ensure that your family’s financial future is safeguarded whatever unforeseen events may occur. Life insurance, medical insurance and critical illness cover are all important tools which can protect them financially – use them.
8. Make a will – if you’re happy for the state to decide who gets your wealth and assets, not to mention your children, when you die then by all means skip this one. If however, you want to ensure that your wishes are carried out when you pass away then a will is a must. If you don’t have one, make sure that by this time next year, you do.
9. Get organised – shoving bank statements, bills and financial documents into random drawers and piles doesn’t make for an easy life. Establish a filing system – I use separate Lever Arch files for each bank account, household bills, pension statements etc – and get into the habit of filing away documents regularly. Once your system is set up it will take minutes each month to keep everything ship shape.
10. Prepare an inventory of your assets – good record keeping means that in the event of your unexpected death, whoever is tasked with sorting out your affairs will have a much easier job and your assets can be distributed to your loved ones as quickly as possible. We’ve made this task all the easier for you by producing a downloadable form to use. This will probably take a few hours but that will be an afternoon well spent and one resolution sorted.
So there you have it – ten financial resolutions, all of which will guarantee that your finances are in a better state at the end of 2016 than they are at the moment. You could pick one, two, five or even all ten, but make sure you write them down and review how you are doing from time to time.
Good luck and wishing you all the best for a happy, healthy and prosperous 2016!