The winter holidays are a nice memory for most of us. It’s been a week since we started the new year and it’s time to think about what financial moves to make in the following 12 months. Time to plan and start achieving our goals:
Don’t be too optimistic about the future
I know the new year just started and we’re full of hopes and dreams. Yet it doesn’t always work like this.
Back in January 2009, we were celebrating New Year’s Eve in Croatia, with my dear sister-in-law and her husband. While they’re my husband’s ‘real’ family (she’s his sister), I always felt as a family member to them and they are both great people. You can imagine we had HUGE hopes for that year, since it started out so nicely.
In 7 months time we were both jobless and I was also going through a cancer scare.
The best year in our lives (as it started out), turned into the worst.
Yes, it did all turn out well, eventually: my biopsy came out clean, I took my small web design business seriously and finally met my husband’s friend who’s living in NYC together with his dear wife and beautiful daughter. They were our family 3 years in a row, as we spent 6 months each of the following year in their home.
But things don’t always turn out well.
So, prepare for the worst and enjoy all current happy moments.
Check up on your credit score
It’s a great time to see where you stand and take the steps to improve. A great credit score will make it easier for you to get better deal and even loans (provided you do need one). It allows you to see if there are any mistakes there and correct them (since they can seriously affect your finances).
Start tracking your expenses
If you did this in 2015, it’s easy to just continue doing it. If it’s something you didn’t think about, now it’s time to start writing down each expense and each time you do get income. It will open your eyes and it’s easier to make any financial decisions afterwards. You’ll also base your monthly budget on this and be able to save more and pay off debt faster (if you also are in debt.)
Set up a budget
Based on your previous expenses tracking or just estimates (if you’re just starting your financial ‘journal’), create a monthly budget. You won’t always stick to it, but it’s a great tool towards better money management. In few months you’ll be able to know approximately where your money is going each month and start saving easier.
Get into the habit of discussing finance
No, it doesn’t mean you should brag with your income (it’s better to always downplay how much you actually earn) or pester people with your financial advice, especially when they don’t want to hear it. But it’s good to discuss various strategies and see what works for others as well. I have spent few minutes chatting with a friend about their pension plans and even discussed it with her husband, who was more than willing to share his ideas. I also contacted another friend and asked her what they chose and, again, she was nice to share some tips.
Instead of blindly choosing a service in this industry, I have already testimonials from people who are successfully using them and a lot of tips and tricks I’d never have thought about.
Consequently, I am always open to discussing freelancing with anyone who’s interested in this. Many people have questions and I have some answers for them.
We discuss money in our family and, as our daughter will grow, she’ll also hear about this. She’s already met our accountant, she sees us preparing our monthly reports, sees me filling in invoices etc.
It’s important NOT to burden our children with information that might scare them (or insist on any possible money problems your family has), but they should understand money doesn’t grow on trees and how credit cards work etc.
Set your lifetime goals or remind yourself about them
What do you want to achieve? Do you want to pay off debt faster? Maybe afford more traveling? Buy a new home? Prepare financially to have children? Now it’s a great time to review your lifetime goals and also set smaller ones for this year.
Write down what you owe
It’s a very painful exercise, just when you are starting to lose weight and need to go through the initial weigh in. You do need to know EXACTLY where you stand. What loans do you have? Have you also borrowed from friends / relatives? Set your priorities and make a debt payment plan. Stick to it.
Be content with what you have
If you can read this, you’re probably blessed with shelter, electricity and internet. You are doing WAY better than many others who can barely feed their starving children. Or who are themselves living on the streets.
Stop looking at the ‘Joneses’ and start being grateful for what you already have.
Live within your means, there’s no reason to spend money recklessly just to impress strangers. Your true friends don’t care about your money. If they do, they’re not friends. You matter as a human being, not as a bank statement.
Stop spending money on stuff you don’t need.
Be frugal with what doesn’t matter, so that you can have more money for what makes you happy. Take us for an example. Even if I am a woman, I don’t have too many clothes (almost zero ‘fancy’ onces), no jewelry etc. I don’t care for this, I don’t need it. Since I spend most of my time at home and then in the park, I really don’t have to be dressed to impress.
We don’t eat out, because I cook from scratch and we care about the ingredients.
We don’t buy new gadgets, unless they stop working. We do have everything we need, but we use them until they need to be replaced.
We do spend more money than others when it comes to traveling for instance. Or for our daughter.
Don’t get into (more) debt
Unless there’s something really really serious (say a mortgage), I don’t see too many reasons to take on loans. If you cannot afford it, you should wait a bit more. Save more money (pretend you’re paying to the bank, as if you had taken the loan) and then buy with cash. You’ll get better deals and avoid the nasty situations one experiences when having to make monthly payments, no matter their situation.
If you are already in debt, don’t dig yourself deeper. It might seem as futile advice, but there are people who, once in debt, will keep on adding new loans, credit card debt etc., just because they are already used to having to pay monthly. Don’t do it. Just focus on what needs paying and try to become debt free.
Save for an emergency fund
If you already struggle financially, saving money is daunting. But it’s possible. Save 10 bucks today, 5 bucks tomorrow etc. The beauty of this system is that little amounts DO ADD UP and you’ll soon have few hundred bucks saved or more. Once you get to a comfy emergency fund you can cover almost any ‘surprise’ expense and not add up to your debt.
Save (more) for retirement
Yes, those ‘golden’ years that can turn into a living nightmare if you have no savings. Start saving now (or keep on doing it). Look for better deals, discuss with your peers and make it a priority.
Earning a side income can really push your forward with debt payment, retirement savings or just affording more cool stuff. Even 1-2 hours/day can get your some nice earnings, if you know what you’re doing.
This year, on March 1st, I’ll launch an extensive freelancing course. The one that details EVERYTHING, from finding a good skill, to working on freelancing sites, creating a top-notch portfolio website, being productive, working with clients etc. You can bookmark it’s address now: earn.pftoday.com and get ready when it’s launched. It will change your life.
Be consistent in your efforts
Again the weight loss comparison (it’s pretty common in the personal finance topic): if you are not consistent in your efforts, you’ll just make few jumps and that’s it. People lose weight when they change their lifestyle. Diets don’t work long term, lifestyle changes work.
Same with your money. If you don’t budget consistently or track your expenses few days and then stop, you won’t reap the benefits. If you save today and waste money like crazy tomorrow, you’ll be back to square one.
Even if yo do fall off the wagon, get back on track and keep on doing your stuff. You’ll see great results in months, if not weeks.
These were some of the financial moves I’d advise anyone to have in mind, now that 2016 has started. What would you add to our list?