Financial resolutions – the new year has come and gone, along with it the usual resolutions. How many have you made and broken already? Set aside a small amount of time each month to focus on your personal finances. This increases your chance of financial success and 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:
Resolutions to achieve your financial goals
Nobody will be surprised that this is at the top of our recommended financial resolutions. It’s common sense – as long as you have debt you should be using every penny of your wages to repay it! You can’t find financial freedom when you owe somebody else money, it’s simple.
- Calculate your 90-Day Number
Add up all your incoming cash over a three month period. Then, subtract all expenses over the same time period. Your 90-day number is the total you’re left with.
This tip is almost as important as paying your debts. You wouldn’t believe how many people are completely oblivious to their own financial situation!
After calculating your 90-day number you’ll get one of two answers. You’re either making money and slowly building wealth or you’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.
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 outside for free. Pack your lunch and give up the £4 baguette you buy every day.
Pick an expense, ditch it entirely or replace it with a more cost-conscious habit. Put aside all the money you would have been spending somewhere you won’t touch it. You’ll be shocked and thrilled when you calculate how much money you’ve saved. A £2 coffee every weekday may not seem like much, however over the course of the year could add up to £520! Doesn’t that sound good! You could try some of our 10 financial tips.
Once you have dealt with your debt and unpaid bills, it’s time to put your money to work. If you are still working then the chances are you aren’t saving nearly enough for when you can’t or no longer want to work. As a rule of thumb you should be saving / investing 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:
- Set up a regular affordable monthly savings amount to a deposit account, to go out the same day you get paid.
- Every time you receive a rise in salary make sure you increase your savings.
- Join your employers pension scheme and contribute as much as you can to obtain employer contribution it’s free money!
One thing you will learn in life is that nobody gets away with anything, including in the financial world. If you didn’t work like a dog in your 20’s and you blew your money in your 30’s and 40’s, you’re going to have to scrimp like crazy in your 50’s and keep working well into your 60’s. That’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: Kevin O’Leary/LinkedIn June 2020