So, the New Year has come and gone along with it the usual resolutions, eat healthier, get fit, drink less. How many have you made and broken already? Setting aside a small amount of time each month to focus on your personal finances not only increases the chance of financial success, it will help you avoid breaking at least one resolution! Here we look at some Financial Resolutions to get you on the right track to achieving financial goals this year:
Pay your Debts
Nobody will be surprised that this is at the top of our recommended resolutions. Itâ€™s common sense – as long as you have debt you should be using every penny of your wages to repay it! You canâ€™t find financial freedom when you owe somebody else money, its simple.
Calculate your 90-Day Number
Your 90-day number is the total youâ€™re left with after adding up all of your incoming cash over a three-month period and subtracting all expenditures over the same time frame. This tip is almost as important as paying your debts. You wouldnâ€™t believe how many people are completely oblivious to their own financial situation!
After calculating your 90-day number youâ€™ll get one of two answers, youâ€™re both making money and slowly building wealth or youâ€™re going further into debt and losing money. If you find yourself with a negative number you absolutely have to change your lifestyle then and there. There is no way on earth you can sustain losing money every 90 days.
Eliminate an Expense
We challenge you to eliminate at least one expense this year. Replace your expensive biweekly manicure appointment with an affordable nail kit so you can take care of your cuticles at home. Cancel the gym membership you use once a month and start jogging outsideâ€”for free. Pack your lunch and give up the Â£4 baguette you buy every day.
Pick an expense, ditch it entirely or replace it with a more cost-conscious habit, and put aside all the money you wouldâ€™ve been spending somewhere you wonâ€™t touch it. Youâ€™ll be shocked and thrilled when you calculate how much money youâ€™ve saved. A Â£2 coffee every weekday may not seem like much, however over the course of the year could add up to Â£540! Doesnâ€™t that sound good!
Once you have dealt with your debt and unpaid bills, itâ€™s time to put your money to work! If you are still working then the chances are you arenâ€™t saving nearly enough for when you canâ€™t or no longer want to work. As a rule of thumb you should be saving around 20 per cent of your annual income, less if you are young and more if you are older.
Some tips to help you save:
â€¢ Set up a regular affordable monthly savings amount to a deposit account, to go out the same day you get paid.
â€¢ Every time you receive a rise in salary make sure you increase your savings.
â€¢ Join your employers pension scheme and contribute as much as you can to obtain employer contribution â€“ its free money!
Improve Your Money Karma
One thing you will learn in life is that nobody gets away with anything, including in the financial world. If you didnâ€™t work like a dog in your 20s and you blew your money in your 30s and 40s, youâ€™re going to have to scrimp like crazy in your 50s and keep working well into your 60s. Thatâ€™s Money Karma in action: reward or punishment, depending on your previous financial actions.
Good Money Karma works like this: if you had a good financial plan and instituted it, you probably have enough cash.
Source:Â Kevin Oâ€™Leary/LinkedIn January 2018