With 2022 just around the corner, it’s time to start looking at how you want to financially plan. Once you’ve got your plan out of the way – you can enjoy your life and handle anything that comes your way. Creating a long-term plan, a short-term plan and a budget for yourself can help set you up for a better relationship with money as you enter the new year.
Budget
If you haven’t written one up yet – you need to. Sticking to a budget can be the best thing for your finances as it allows you to look at how much money you bring in, the amount you spend, the amount you owe and the amount you save. The thought of starting a budget for the first time can be daunting, but once it’s done it allows you to have a lot more freedom with your spending and saving. If you’re looking for somewhere to start to begin spending less – have a hard look at your budget and find categories that you can cut back on. Small purchases build up over time so look at where you can cut back if you need to.
Small changes you can make to help cut costs include:
- Make a shopping list when you do your weekly food shop.
- Make your coffee at home instead of buying it out.
- Bring your homemade lunches to work instead of buying them every time.
- Move date nights to home and find alternative ideas like cooking dinner together.
- Have a look at your subscriptions whether it’s the gym, movie/tv streaming, music streaming or anything else – do you use them all?
Savings
How much and how often you save fully depends on your individual circumstances. So once you’ve figured out how much income you have and review your spending habits and debts – then you can work on how much to put aside. It’s recommended that you put aside at least 20 per cent of your income into your savings each month. This won’t apply to everyone but acts as a general rule – which you can then look at your income flow and alter how much works for you.
Build your emergency fund
Having an emergency fund aside is one way to protect yourself when emergencies happen. To start you need to decide how much money you want in your emergency fund by calculating your monthly expenses – ensuring to include your rent or mortgage, utilises and basic expenses. This should equate to around three to six months worth of expenses to ensure your set in the event of losing your job or taking on hefty medical bills.
Make a long-term financial goal plan
To help you reach your goals make sure you transfer the money for your savings or investments into designated savings or investment accounts so you can’t just transfer it when you want it – but when you need it. Setting long-term financial goals is one way to keep yourself on track and to see that your money is working for you. What your goals may vary from person to person. These goals could be saving for retirement, a downpayment on your future home or saving for a trip you want to take – after you’ve decided what the goal is you can start planning for how and when you can reach them. You can break down your goals into monthly and yearly budgets to reach your goals. This allows you to work towards the goal with milestones to keep you on track and see your progress.
2021 is ending soon – so it’s time to start thinking about the resolutions you want to make for 2022. While many people will make resolutions surrounding healthier lifestyles and spending time with loved ones, it’s important to not forget about your financial goals and health. Start thinking about what you want to do with your finances in 2022 and contact us today.
