Ringing in the new year is probably one of my favourite things to do. It's the start of new beginnings, and everything seems so incredibly optimistic and filled with potential. A new year gives us the opportunity to pause and hit the restart button. The new year is a great time to set goals, create habits and get into a routine so that the rest of your year can be on autopilot.
Many people set fitness goals for the year. We know that getting in shape is important for your health, and can prolong your life and make you feel good. But when you're trying to get in shape, the hardest part is often getting started. Some days you don't want to drag yourself out of bed to head to the gym, but you do anyway because you know that once you create a habit, going to the gym will become easier.
The same is true for your finances.
Getting your finances "in shape" is important, and there's no better time to build financial habits than the new year. As with the gym, once you create the habit and put your finances on autopilot, you'll sail through the year without a care in the world.
Start by tracking your expenses
Taking control of your finances is no easy feat, but in the long-run it will be incredibly rewarding. Starting small, so you don't get overwhelmed, is important, and tracking your expenses is a great way to start. Setting aside an hour or so each week has helped me get into the routine of knowing exactly how much money I have, which in turn minimizes my financial stress.
Build a habit
Once you get the hang of tracking your expenses, you can start to take on more when it comes to managing your finances:
Try the following to help get your finances fit for the new year:
1) Set up an automatic transfer of money to your savings account after each paycheque. Starting with $100 a month will yield you $1,200 in savings per year.
2) Make extra payments to pay down debt each month. If you have some money left over at the end of the month, or you come across a bit of a windfall, you might be inclined to put it towards any debt that will allow you to make extra payments. Getting yourself into this habit means that, in the long run, you'll pay off your debt faster and pay less interest.
3) Spend mindfully. Our society bombards us with advertisements for material items each and every day, and when we subscribe to that culture, we spend our money on items that may not actually add value to our lives. By getting into the habit of knowing where your money is going, you can start to look at what you're actually spending your money on, and decide if it's truly adding value to your life. There's nothing more rewarding than spending your money on what is valuable to you.
Getting your finances in shape this year may seem like a daunting task, but the hardest part is starting. Taking control of your finances is empowering, and creating smart habits will set you up for success and financial freedom!