Pattie Lovett-Reid: 12 steps to fix your finances in the new year
These small New Year’s resolutions have big results.
I love the start of a new year, and yes — I’m that person who makes New Year’s resolutions every year! I like to embrace small yet stretchy goals, and I always have good intentions that don’t always translate into the desired results. But, I keep trying — and financially speaking — I believe if you commit to do one thing differently each month in 2020 you will be in a better financial place by 2021.
I broke tasks down month by month, but I appreciate you might decide to take things in the order that makes sense to you. It doesn’t matter how you do it, as long as you do something. Bottom line, it is all about improving your financial status by recognizing that small changes can lead to big results. Creating wealth is rarely about doing one big thing right; it is more often about doing a lot of little things right.
Here’s a list of monthly goals that you can tackle in the new year:
January – Commit to taking control of your financial situation. Set financial goals that matter to you. Get excited about saving money.
February – Pay down debt. The holiday bills are rolling in and debt has piled up. Pay off the most expensive debt first – the one with the highest interest rate. Put away your credit cards and begin the financial detoxification process.
March – Focus on other elements of your financial plan. Explore insurance options, estate planning or begin developing an investment strategy.
April – The tax deadline is right around the corner. While it’s a little late in the year to get strategic about this, take the time to ensure you are getting the biggest bang for your tax buck. Set yourself up for success next year.
May – Spend less and save more. Enough said here.
June – Become an automatic millionaire. Okay, there is nothing automatic about becoming a millionaire, but you can increase the odds of becoming one. Make sure you pay yourself first by having money come directly out of your account to pay off debt or into investments.
July – Review your portfolio to ensure your asset allocation is aligned to who you are as an investor. Make this a year of balance and take the time to figure out your required rate of return, versus your desired rate of return.
August – Get insured. Not everyone needs insurance but everyone needs to ask the question, “What would happen to my family if something happened to me?” How you answer that question will dictate the type of insurance you should explore.
September – Create a will. No one likes to think about their demise, but sadly things happen when you least expect it. My father passed away at 36 from a heart attack. He had a plan in place and while it clearly didn’t replace him, getting through the financial elements were easier than they would have been without the will.
October – Amp up your earning potential if that is important to you. What will it take to advance your career to the next level? No one wants to be unbelievably average at what they do.
November – Be mindful of holiday spending.
December – Review, reflect and revise your last financial year. Start thinking about what you can repeat and improve in the upcoming year.
You might not believe in New Year’s resolutions, so you might prefer to refer to this as an action plan. The only thing I know for sure is, if we don’t try to make some changes, there is a 100 per cent chance we will be starting all over again in 2021.