The holidays are near, that means it’s once again almost time for new years resolutions. Are you in debt? Maybe getting out of debt can be your main focus for next year. Looking to remodel or get a new home? Then, you might want to focus on having the necessary funds and financial tools to meet these goals.
By reviewing how you did in the past year and understanding how to position yourself, you can make next year your best financial year ever! Once you have a firm basis on what to expect in the New Year, then you can strategize and begin to look at the many financial tools from automatic savings deposits, to installment loans, or refinancing.
Review the Past
Whether you’re relieved or disappointed that the year is over, it can still offer you some valuable lessons – if you are willing to look. Hopefully, you’ve kept all your bank statements or have access to online banking statements. This will help you understand your spending habits and also how seasonal changes affect your differing needs. If you kept a budget, you are in a great position to get a bird’s eye view of your total income and spending picture. Review all of this information and start looking for the following:
- Sources of income – Did you get extra income somewhere that you didn’t expect? Will you be getting the same income or more this year?
- Spending patterns – What did you spend the most on? What was seasonal in nature? Did you overspend during the holidays?
- Bill awareness – Did you notice items in your statements that you don’t remember buying? With today’s modern technology, many subscribers to repeating services forget to cancel services thinking that since they did not receive a bill, they are not charged. Check your statements monthly. January is the time to make sure all terminated services aren’t still being charged automatically to your account.
- Maintenance – How much did you spend in maintenance and do you see any trends there?
- Financial tools used in the past – Review the tools you used and whether they did or didn’t work for you. It can help you decide what best suits your needs in the future.
Predict the Future
Okay, so maybe you’re not a psychic, that doesn’t mean that you can’t foresee some expenses arising in your near future. How old is your roof and have you noticed any leaks or rot? How old are your appliances or car? What did it cost you to maintain your lawn last summer? What’s the state of your health and do you foresee any expenses? Are you planning on going back to school? These are all questions with definitive answers that can give you some warning about potential expenses that might occur this year. Instead of hoping that they won’t occur, why not be proactive about it? Just prepare for having to replace a refrigerator or a stove. Knowing that, it may make sense to get some homeowner’s insurance on these appliances or trade your old car in for one with a warranty before a problem actually arises.
Once you have a general idea of what’s happened and what might happen in the future, you can begin to plan your financial strategy by setting your priorities. You may not have enough money to do everything you want to do next year and now’s the time to figure out how to manage your finances before you are in emergency mode. If you have some health issues, does it make sense to pay for additional schooling? When your car is old, should you trade it in and get a new one before it breaks down? If you aren’t using it for long distances, it might make more sense to pay down debt instead of buying a new car. Only you really know how these decisions might impact your lifestyle and income potential, however, having a good solid sense of the past and understanding your future risks can help to make those decisions easier.
Identify Your Financial Tools
Learn everything you can about the tools you intend on implementing to take care of your finances next year. Are you looking to remodel? Then a home equity loan might be an appealing way to finance this project. Start to learn about them now, not later. You don’t just want to understand the mechanics of your financial tools, but the risks and tax consequences too. The tool should meet your immediate financial need and not derail your future plans too.
Get your documentation in order so that you have a good idea of what to expect when you apply for an installment loan. Now is also a good time to get a copy of your credit report and start to address any issues there. By being proactive, you can start to actively work to raise your FICO score so that you can apply for bigger installment loans in the future and save money in the long run with lower interest rates on those loans.
Don’t just rely on financial tools that you have used in the past. New products and services are appearing to meet a broader range of needs and it can be very useful to be aware of the wide range of choices you have to make next year a year of steady, increasing, wealth and happiness.