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Improve Your Finances in the New Year: a Five Step Plan of Attack

Improve Your Finances in the New Year: a Five Step Plan of Attack

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Did you ever make a budget with great intentions but then lose track of it after a few weeks or days? Budgeting can be exhausting, and you make many sacrifices, even if you don't reap the rewards.

It's easy to get stuck without clear financial goals and a budget plan. This article will help you set and achieve the financial goals you care about.



What are your financial goals?


Financial goals are money-related goals you wish to reach. Financial goals can also include objectives that require money. For example, you might want to buy a beach house or go on a dream vacation to the Maldives. You can create a plan for getting the money you need by identifying what you want to do in the future. Your financial goal is the monetary target.



There are two types of goals that you can reach:


  • Short-term goals: These are things you want to accomplish in a short time, usually within one year.
  • Long-term objectives: These goals require that you take a step back to see the larger picture. These goals can be as simple as goals you want to reach in two years or as complex as those you hope to achieve in 50 years.


Setting Financial Goals



Where do you begin once you have decided that you want financial goals? If your plans aren't in line with your true desires, you won't be able to stick with them even when it gets complicated. Spend some time imagining and thinking about the life you desire. How would you like your life to look? Who will you be? Where will you be living? What are your goals, and what do you want? Each person's goals are different. Your cost of living will also play a role in your financial goals.



Here are some short-term and long-term examples to inspire you.



How can you make your dreams a reality?

Now it is time to make a plan to bring your dreams to life. First, it will take some research and simple math to determine how much it will cost you to reach your goals. Then, based on your income and expenses, you will need to create a plan for when and how to get each target.

When creating a financial plan, SMART is a great framework. This acronym means that each goal should be specific, measurable and achievable. It also indicates that they must be relevant, time-bound, and relevant.

How can you choose which financial goals to prioritize?

Once you have written down all your goals, you can review them and decide which ones are most important to you. You should identify which goals are important to you. One person may choose to pay off student loans over saving for a wedding, but another individual might have the opposite effect. It all depends on who you are. Once you have identified your goals, rank them to pursue them.

How often should your financial goals be reviewed?

To track your progress, check in at the end of each month or more frequently if you have short-term goals. This is a time to assess whether your goals are still in line with your desired destination. Next, take a closer look at your goal review at year's end. Based on the results, you may decide to go aggressively or reevaluate your current targets.

What can tax withholding have on your financial goals or budgeting?

You will not be able to invest or earn interest on the tax refund you receive at the end. However, a lump sum in the year's future can benefit some. If you are having trouble saving money, your tax returns could help you significantly impact one of your goals.



Failure to plan is a sign that you're planning to fail.


It's not difficult to learn how to manage money. It's a lot like playing a videogame. You may feel awkward the first time you play a video game. However, you can improve your game if you play the game for a while. You can become a master of the game if you study the rules and learn how to use each tool.

Money management is not a one-size-fits-all approach. You can't just "figure it all out as you go." To be a good money manager, you need to treat money as you would treat your favourite video game. It is essential to have a plan. Research shows that people with more substantial financial resources are happier1 and healthier2, have better marriages3 and have better cognitive functioning3.



A financial tip is a way to manage everything, from budgeting to paying down debt to investing or saving money to achieving your ultimate financial goals.

If you are looking for financial advice, this should be your guideline to determine if a tip or trick might be worth considering.


Experts have identified 30 personal finance tips to help you surpass that threshold. You can achieve financial freedom in just one month by trying one per day.


List your debt


  1. Your credit card bill should be higher than the minimum
  2. Calculate your daily interest
  3. Automate your savings
  4. Perform an annual review of your finances
  5. Write down your goals
  6. Spend no money on your day
  7. Set up alerts
  8. Make a tax file
  9. Plan fast meals




The vicious circle of poor financial and poor mental health

Numerous studies have shown a link between financial problems and mental health issues like depression, anxiety, or substance abuse.


Stress from financial problems can negatively impact your mental health.

A decline in mental health can make it more challenging to manage your money. It may be harder to focus or have the energy to deal with a growing pile of bills. You may also lose income if you are depressed or anxious.

These financial difficulties can lead to more significant financial problems and worsening mental problems. This can cause you to fall into a downward spiral of declining mental health and increasing money problems.

There is a temptation to try and solve all your money problems by trying to do it alone when you are facing financial difficulties. Many people consider money taboo, and it should not be discussed with anyone. It can be awkward to disclose how much you earn and spend. You might feel embarrassed or ashamed about financial mistakes that you have made or that you cannot provide for your family. However, ignoring your financial problems will only make them worse. You'll find that others will be more understanding in this current economy where many are struggling due to no fault of their own.


Talking face-to-face is a proven way to relieve stress. However, it can also be helpful to talk openly about financial issues. Keep your money worries private until they become overwhelming. It is easy to make your problems seem less daunting by telling someone you trust.


Talking to someone doesn't necessarily mean they have to solve your problems or provide financial assistance.

They need to be open to discussing your problems without judgment or criticism to ease your burden.

Be open about your feelings and what you are going through.


 

Sources:

https://studentloanhero.com/featured/finance-tips-31/

https://openstax.org/books/college-success/pages/10-1-personal-financial-planning

 

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