5 tips to make 2016 your best financial year
A new year is the best time to make changes in our lives because it has that sense of starting fresh. When it comes to money management, you must be ready to make alterations every now and then. But New Years is the perfect time to go through what worked and didn’t work for you in the previous year and sketch up a whole new plan for a whole new year.
Here are a few ways to get your finances back on track in 2016:
Financial goals: First, you must identify your financial goal. Whether it’s planning for more than one vacation this year or saving to purchase a new home or a car, you need to list down all your purposes for the year. Listing your goals will give you an estimate of how much money you will need to put aside to achieve all your goals. Also, don’t be afraid to set deadlines while jotting down your goals for the year.
Make a budget: Track all your expenses in the previous month or year and then make a list of the things you would continue to spend on. Building a budget for your expenses and savings is a great way to monitor your money. Just because you’re making a budget doesn’t mean that you have to give up on a lot of things. Make sure to create a realistic plan that doesn’t change your lifestyle drastically.
Pay debts: One of the fastest ways to be debt-free in 2016 is by paying off more money than you actually committed to every month. And the best way to pay off all your debt soon is by tackling debts with highest interest rates first. You will be surprised if you calculate the amount of money that you will have to shed out just to clear the interest part of your loans. The sooner you pay off your loans, the sooner you can start taking action towards achieving your new goals.
Boost savings: It’s never late to start a healthy financial routine. Don’t wait for a lump sum amount to start a savings account. Sometimes all it takes is changing your daily habits for a financially sound future. Most people save money to make a life-time investment or for any unforeseen emergencies. Create a separate savings account and be sure to diligently park a certain percentage of money from your monthly paycheck in this account – ideally 10%. If you get some extra money, it’s best to save that too.
Emergency Fund: Consider a financial safety net as a must in your 2016 financial plan. One of the most important things while planning your finances is to have an adequate emergency fund that you can access to at any given point of time. Ideally, you must maintain six months worth of your expenses as an emergency fund in a separate savings account. Open a savings account that’s exclusive for emergency funds and treat it just like how you treat your bills every month by automating certain amount of money into the emergency fund account.