How to start your new year well
The new year brings with it fresh beginnings and new resolve. A chance to clear away the mess of previous years and start again. Gym memberships typically peak in January, and in many ways, dealing with your personal finances is a lot like doing exercise. We all know we need to do it, we all know it’s good for you, but it can be hard to get going. Getting off the sofa and into action is the first hurdle. Once you’re moving and have a bit of momentum you can start to build some good habits. This is probably the best opportunity you’ll have all year, so make the most of it.
Here are 3 practical things you can do right now to make this new year your best one yet.
Have open discussions
If you are in a relationship, you may often find it difficult to discuss money with your other half. We all have different attitudes toward money. It is an emotional subject as much as a numerical one. Take this opportunity when we are all considering new beginnings and the year ahead to start the conversation. Find some time to naturally start talking about things when you aren’t stressed or distracted and talk about your priorities and goals. Discuss your attitudes to money and what things stress you out. Your behaviour around money is often the most defining factor of your long term financial success.
Following on from those discussions, (even if they’re with yourself) you should identify your priorities. Long and short-term goals and set in place some strategies to work towards them. Will you need a new car this year, or are you planning on a holiday soon? Planning on moving house, or increasing your giving to a worthy cause? How much will that all cost and how much do you need to save every month in order to finance it?
Do you have an emergency fund in place? If not, how much cash would you need to cover 3-6 months of essential expenses? Prioritise saving that up. As expats this is all the more essential, as our residency is so often tied to our employment. If you were to lose your job, for instance, how much cash would you need to fund your next few months’ expenses? Would you have to leave the country, or how would you pay your rent?
Looking further out, you need to consider the B-word. You really should write a budget. The more accurate and realistic it is, the better, but even just ballpark figures of your monthly spending will give you an idea of what you could and should be saving this year. If you have written a budget previously, take this opportunity to review it, as your expenses or income may well have changed since you last looked at it. Without a plan on your spending, you’re setting off on your financial adventure without a map. Hoping to reach your destination, is no hope at all. You almost certainly won’t reach your goals. Failing to plan, might as well be planning to fail.
Put it in writing
Once you have those goals, write them down. Stick them somewhere you can see them regularly. Save them as wallpaper on your phone or write them on a piece of paper in your wallet. If you are in a relationship, make sure you both agree on them. Sign them and stick them on the fridge if you need to, as a commitment to yourselves. Something as simple as “We will save X per month for this thing we will need in 6 months’ time, and we commit to saving Y per month for our retirement” is all it takes. Seeing that in front of you will help you stay the course as the new year’s euphoria starts to fade.
Remember that building wealth is a marathon. No one can sprint the whole way. There will be ups and downs along the journey. Treat this new year as a distance marker in the road, where you refresh and refocus on your goals for the journey ahead.