How To Set Financial Goals For The New Year

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January is the time for New Year’s resolutions and although these usually focus on making up for the excesses of Christmas, it is also an opportunity to make some very real, significant changes in your life. Not least to your finances. Why not make this New Year a new financial beginning for you? I recently started my own money saving blog but I felt these tips deserved a wider audience 🙂

·         Plan carefully

It is important to appreciate the difference between financial dreams and a financial plan. A dream is a far-off desire, but a solid plan will help make it a reality. Start by listing your goals, long and short-term and then estimate how much you will need to save in order to meet these milestones. Importantly, give each step along the way a time limit – This will make it easier to fulfil your objectives.

·         Set yourself a budget

A sensible budget should be at the heart of any financial plan. There are plenty of people who earn relatively lucrative salaries, but never seem to save precisely because they do not have a budget. It can seem like an intimidating task, but truly analysing what you are planning to spend and when will create a clear path towards achieving your financial goals. If it makes it easier, use the ‘envelope system’ whereby you allocate an envelope of money for each budget item.

·         Get out of debt

Give yourself a financial clear slate by getting out of debt. It is the first step towards saving. Of course, with credit card bills and loans aplenty, hauling yourself out of debt may be easier said than done. A good first step is to consult an Experian CreditExpert report which is an important guide to your credit status and what you can expect from your credit check when applying for loans including a mortgage. Another initial action point is to pay off larger debts first as they will accrue greater interest in the long-run. I get my report every month and this really helps when budgeting.

·         Think what you can save

We can all save money if we really think about it. Sometimes it is only small savings, but the pennies soon turn into pounds. Start by conducting a spending audit of yourself. Truthfully analysing your expenses and outgoings can be a brutal process, but it is necessary if you really want to work out where to save money. Maybe you don’t need to add to your wardrobe so regularly? Maybe you can cook at home more rather than going out for dinner? There are so many ways to cut back! Experts say that you should be saving at least 10% of your income to make a real difference. 

·         Start investing

This does not need to be as dramatic as it sounds! In simple terms though, a sensible investment will mean that your money is going to be working for you. If you already have investments, take a close look at them and see if they are yielding as much as they might elsewhere. If you have ‘lazy’ investments which could be doing better, look to diversify. Do your research and find some sensible investments which can bring you a steady return, but nothing too risky. If you need some help in doing this, find a reliable financial planner to walk you through the process.