There’s nothing remarkable about starting a new year with a clean slate and a renewed sense of purpose. To make the New Year your best yet, preparing before jumping in is essential. Before making any big decisions, the necessary preparation you can make is getting your finances in order.
1. Gather Your Information
Start with a clear picture of your financial situation. Find out how much debt you have, your net worth, what types of investments you have, and where your budget goes. Many free tools are available online to help track all of these items for you. Both will provide you with an easy way to track all of your finances in one place without much extra work. The main objective here is to have more information than less when it comes time to make the tough decisions so that those decisions can be made from the best possible position in which to succeed.
2. Make a Plan and Budget
Now that you’ve got all your information, it’s time to make some decisions. If you’re spending money this year, how much will you need to save? Have a plan in place with a budget before making any more purchases. If items are optional in the first few months of the year, save the money from their investment and put it towards the expenses ahead.
3. Make a List
Please list everything that needs to be done this year and prioritize it accordingly. If there are some goals for achieving financial freedom, write those down as well. Keeping those top priorities in mind when deciding how the rest of the year will play out financially is essential. Be realistic with your list and set milestones for each item so that they are more manageable while still being able to achieve your big goals.
4. Work on Your Credit
Getting a better credit score is essential to the overall financial plan. The FICO Credit Score was created by Fair Isaac Corporation and is widely used by banks and other lending institutions to determine creditworthiness. You may need to pay down some of your debt to do well on this test. If this is the case, ensure that you keep up with all of your payments to get the best possible results for that item. Building a good credit history only takes time and effort if you put it into place regularly, so take the steps.
5. Pay Off Debt
Once the money is in your account, it’s time to pay down the debt you have been putting off. Use a goal tracker to remind yourself of your end-of-the-year borrowing so that you remember and end up paying more interest on it. If there are certain debts that you know you need to pay off, set realistic goals for how much they will be paid back each month and keep tabs on them accordingly. The debt must be delivered as quickly as possible because interest rates are high in today’s economy, and everyone’s finances are pretty different.
6. Think About Insurance
As you work on your budget and begin saving, some other significant expenses will need to be considered. One of those concerns is insurance. Before making big purchases, consider what kind of coverage you may need to protect yourself financially should an accident occur.
7. Set Goals
Finally, once all the other steps have been taken and you’ve got your budget in place, think about where you want to be by the end of the year. What is one thing that you want to accomplish for yourself? That can be scaled back to smaller amounts for each month if necessary. Try to choose a realistic and obtainable number without being too ambitious so that it will remain a priority throughout the year.