A healthy personal financial status is a desirable thing. 2020 was a year, unlike any other, severely altering our realities and expectations, and our personal finances were no exception. A fresh start is no doubt what we have all been longing for.
While 80% of New Year’s resolutions lose traction by week two, your financial resolutions do not need to be part of that tragic statistic. There is hope – if you follow these five fool-proof steps to healthier personal finances – that even you can not only have…aka afford…your cake but eat it too!
1. Review Your Position
The first step in bettering your personal finances is to evaluate your lifestyle and habits. Goals can only get you so far if they aren’t realistic and in accord with what you can actually achieve.
- Review both your income and your fixed expenses. Until you know how much you are left with (after all necessities have been paid), it is challenging to set an appropriate, or even realistic, goal.
- If you have nothing left over once you pay your bills and account for essentials, it’s time to consider cutting non-essential fixed expenses like tv, data plans, etc.
- You can also look for creative ways to set extra cash aside in order to support your financial goals.
2. Write Down Your Goals
Before making a decision, take the time to list all of your short-term and long-term goals. Go crazy; the sky is the limit. When you have completed your list, chose one or two that are actually plausible in the foreseeable future. You will be able to return to your list whenever you are ready for the next goal.
- “Your financial goals can be broken down into daily, weekly, monthly, semi-annual, annual, or even longer time-frame milestones. Define your short-, medium-, and long-term goals.” – SavvyNewCanadians.com
- Slow and steady wins the race, even when it comes to saving or paying off debt. Realistic financial goals will prove to be more encouraging and motivate you to continue as you achieve them.
- Don’t give up on the long-term or larger goals. Keep a mood board of sorts in your office or kitchen to help you keep your mind motivated and your wallet well clutched.3.
3. Educate Yourself
Know which goals to prioritize and which have higher pay off by doing a little research. For example, it may appear to be wise to put all your money into building an emergency fund before paying off debt. However, the opposite is actually true. Look for ways to educate yourself in best practices, highlighting creative solutions for individuals facing the same challenges as you.
- Explore the recommended reading list from BusinessInsider.coms’ list of the 17 best personal finance books for 2021. Get reading, applying what you learn. (Of course, you will want to start out by seeing if your local library has these books before spending the cash.)
- Consider the possibility of unforeseen expenses, how much you should have set aside if they occur, and how to go about it in a manner that won’t hurt your hard-earned savings.
- You will learn that loans, in general, are not a healthy way to assimilate debt or grow your savings. However, you may want to explore the idea of a small online loan. There are always instances in which a little help, under the right circumstances, can get you through a hard time without damaging your progress. 24Cash is built on the belief that all hardworking Canadians deserve a break and certainly deserve the life they work so hard to build for their families.
4. Practical Habits
Good intentions and well-planned goals are one thing, but practical habits are essential for success. Making small but easily incorporated changes to your daily habits can make for overwhelming success. Try adding these three suggestions to your daily routine in an effort to reach your goals for personal finance.
- Make it a family affair, and teach your kids the value of good financial habits from an early age.
- Leave your credit cards out of your wallet and tucked away. Second thought before purchasing, sleep on it.
- Ditch the points. The habit of collecting points…spending more than we need for points that are less worth than we think. We end up losing track of what we consume or making extra purchases in an effort to gain points. Rather than think about cashing in that $10, just don’t spend the $150 it takes to earn it
5. Continue Growing
Once you have reached your immediate goals, be careful not to fall back into old habits. At times the realization of our goals can result in a sense of false security. When we reach our goal weight, we may be more likely to think we can loosen our commitment to our regime. When we pay off our debt, we may be more likely to think a little spending won’t harm our recent success. However, while reasonably loosening restrictions is both realistic and healthy, it’s essential to recognize that a false step towards old habits can quickly snowball.
- Just as you planned your return to a healthy financial status, prepare for a healthy amount of wiggle room that will neither harm nor detract from your achieved success.
- Don’t allow setbacks to discourage your desire to continue forward. Missteps happen, money is spent, savings lost, but that doesn’t mean you cannot regain your advancement towards financial maturity. Just dust yourself off and try again.
- Make a list of small goals to continue your success and keep you motivated. For example, start a vacation fund, setting $5 aside every week. That’s $20 a month and $240 a year. While that may not seem like much, a weekend away at a hotel could offer the relaxation and restoration you’ve been looking for.
If at first, you don’t succeed, try, try again. There is nothing to say that 2021 can’t be the year you establish healthy, smart financial habits and goals. Get creative, develop your strengths, and celebrate the wins, big or small!