We are at the end of the year – the time when you’re busy preparing for the holidays. But this is also the time to analyze your finances and make fresh plans for the New Year. This is the time to reflect.
The last 3 months of the year is the slowest period of the year, which makes it a good time to analyze your financial situation. As you do it, here are a few tips to review your financial plan and create a new one.
1. Review your income goal of 2019: Did you have a specific goal in mind for your income? Did you have a set amount in your mind? Did you earn that amount? Well, if you didn’t earn that amount, then think about why you couldn’t achieve your goal. Is it because you didn’t get a pay hike? Is it because you didn’t get any promotion? Is it because you didn’t earn money from side hustles?
List all the reasons and think about how you can increase your income in the next year. If your boss is not ready to give you a hike right now or soon, and you’re not in a situation to leave the job, then it’s better to reduce your expenses for the time being. It won’t help to increase your income. But at least, it would help to uplift your savings.
2. Review your spending goal of 2019: How did you spend money this year? Did you spend money on what is important or did you spend money on unnecessary things? Did you make a lot of impulse purchases? Analyze your spending habits carefully so that you can change them in 2020 and save money. If you spent a lot of money on electricity bills in 2019, then take steps to reduce your electricity consumption in 2020.
Remember, if you don’t save money, then it would be extremely difficult to reach your financial goals in the long run.
3. Review your saving goal of 2019: How much have you saved in 2019? What is your total saving rate? Are you satisfied with it? Have you saved anything in your emergency fund? Have you saved enough money for attaining your short-term and long-term financial goals? If you have not met your saving goal in 2019, then it’s high time you think about the ways to boost your savings in 2020.
Look for ways to boost your income and lower your expenses in 2020. Keep the difference in your savings account.
4. Review your debts and credit score: What is your credit score in 2019? Is it high or low? Do you have any idea about your FICO score? If not, then you can check your credit score right now. |
Your credit score has a direct impact on your financial life. It can affect your loan interest rate, insurance premium rate, and job prospects. If your credit score is low, then find out the probable reasons behind it. Is your credit score low due to ongoing debt problems? If your credit score is low due to credit card bills, then get help with debt consolidation. It will help you to repay your bills and improve credit score gradually.
5. Set your goals for the year 2020: After you’re done with the financial review of 2019, it’s time to set your goals for 2020. What do you want to achieve in 2020? Do you wish to take your business to the next level? Do you want to buy a new home? Do you want to buy a new car? Answer your questions and list your financial goals for 2020.
If there is any financial goal that you wanted to achieve in 2019 but you couldn’t do it, then think about the ways to attain in 2020. Be practical and realistic.
6. Create a budget for 2020: The New Year has not yet begun. This is the best time to plan your budget for 2020. It’s kind of a roadmap that can help you to achieve your financial goals in 2020. For instance, determine how much you will spend on investments. If you have suffered a huge loss in 2019, then you can invest less in 2020. If you’re planning to expand your business, then set a budget for it. How much are you willing to invest in your business? How much are you willing to spend on buying the latest technology? Be very specific and set your budget accordingly.
The last 3 months of every year are very special. There are so many festivals and celebrations. No one would like to crunch numbers or do a financial review at this point. But believe me, if you review your finances and set your goals for 2020, then you’ll be the one who will profit eventually.