MANILA, Philippines – What are you aiming for this year? Do you want to be in better shape? How about getting rid of bad habits? Will you be working toward a promotion in your career?
Putting effort into achieving something this year is great. But have you considered looking into your finances and finding out how you can improve?
If you want to have less debt and more money in your pocket, there are several ways you can improve your financial life for the New Year.
1. Start with creating specific goals.
Be specific about what you really want to achieve with your finances. Earning more money or paying off all your debts, for instance, is a good goal. But saving P20,000 more is better. Affording a holiday in Europe or in the US is a more motivating goal.
When setting financial goals, it’s important to be realistic and detailed. To start, look at your current financial situation. If you have set goals before, it’s also smart to look back and evaluate. Then, identify the aspects you need to improve on.
Set goals from here, applying the SMART principle—specific, measurable, attainable, realistic and time-bound. When your goals are clear enough, write down concrete action points that you need to take in order to actually have a better financial life at the end of the year.
2. Commit to a budget.
This is fundamental if you want to achieve your financial goals this year. If you want to pay off debts, make a big-ticket purchase or just save more money, you need to really stick to your budget.
If you already have one in place, see whether you were able to comply with it last year. Find out what made it work or fail. Did you spend too much? Are there any adjustments you need to make this year?
If it’s your first time to set and commit to a budget, you can start by tracking your expenses to know how you can allocate your money better. Then, as you work through the allocations, make it a point to set aside first 10 percent of your income as your savings.
3. Make payments automatic.
Your budget won’t work if you’ll always give in to spending on impulse. To keep your budget, set up automatic payments for your bills, church donations, government contributions and other things you spend for on a regular basis.
This helps you to avoid spending the money that’s supposed to be set aside for more important expenses. Automatic payments are also more convenient, sparing you from the drawbacks of late fees when you couldn’t find time to go to the bank.
4. Consider making an investment.
To achieve your financial goals faster, you can get into an investment. Explore the opportunities in different investment types like stocks, entrepreneurship and real estate. An investment can help you save more money faster, make building an emergency fund easier and get rid of debts.
Begin by reading up on all the investment types, understanding how each one works and the risks involved. Then, find out your risk tolerance level. Are you fine with the idea of possibly losing some money? If not, what investment terms will you be comfortable with? You can talk to an experienced investor to help you out in getting started.
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