Though it’s the key to financial freedom and security, we sometimes get so caught up in our daily lives that we don’t make finances a priority. That’s why now – before the start of a fresh new year – is the perfect time to reflect on your financial life and heed some important lessons.
Here are some ways to review your finances to see what you can build on or even improve for the coming year:
• Assess your budget. Did you create a budget during the year? And if so, did you stay within it? If you didn’t create one, make budgeting part of your plans for the new year. Simply review all your expenses and your income. Then, look for ways to cut costs and save more. Once you build your budget, track it each month, and make adjustments as needed.
• Take stock of your savings. Saving money is hard, especially when inflation is high. But, it can be done. Review your savings and retirement accounts to see how much you saved. This is also a great time to review your monthly budget to uncover ways to free up some money for savings.
• Plan for unexpected expenses. Did you encounter any unexpected expenses during the year, such as home repairs, medical bills, or even a job loss? If so, how did you manage those expenses? Did you use emergency savings or credit cards? Planning for unexpected expenses should be part of your goals for the new year.
• Measure your debt. Did your debt increase from the previous year? If so, determine why. Was it a result of your spending or was it because of unexpected expenses? Knowing what you owe and why can help you manage debt in the new year and gain greater control of your financial life.
• Review your credit. Another important thing to assess is your credit, which is essential in helping you qualify for and get better rates on loans. You can use sites like myFICO to determine your credit score. Try using Chelsea Groton’s Credit Score tool to understand why your score is what it is, so you can work on building it up in the new year. For example, if you had late payments that lowered your score, you can set a goal to pay bills on time.
Finally, give yourself financial grace!
If you have had a difficult financial year, remember that you can always turn your financial situation around. Spending time with your finances now is a great way to start planning for a bright new financial year. Looking for more guidance on how to budget or manage your credit in the new year? Register for an upcoming budget or credit class. Chelsea Groton classes are always free of charge and are typically offered in branches and online.
