The beginning of a new calendar year is the perfect opportunity to take stock of your current financial progress, review your situation over the past year, and make plans for the next 12 months and beyond.
For the next months, you want to ensure that you create strong financial health through proper financial planning. Managing money, in general, isn’t the easiest task, regardless of your income level. And with 2022 promising more uncertainty (especially with COVID still here), you can use the following tips to gain some financial stability throughout the year.
1. Review your investments
It is important to take a second look at your investment portfolio, assess your assets, and keep an eye on your cash flow. Take the time to list all your investments and determine their overall asset allocation. Next, track the performance of each investment over the previous 12 months and see if they met your expectations. Also, take the time to compare how each asset weighs against your expected return on investment.
2. If you don’t have any investment, consider starting one
If you haven’t made any financial investment, you might want to consider doing so this year. Understandably, an investment will be one of the last things on your mind, considering how the past couple of years have turned out. Despite the troubles of the recent financial years, there are still a lot of investment opportunities or options that have thrived, from those trading stocks to those committing funds into investment property for sale. You also want to ensure that you get sufficient cash flow for your investment. And one way you can achieve this is by automating your investment or savings. Doing this is especially important if you usually spend more than you should.
3. Save more money using the 20/30/50 budget rule
Saving always forms an integral part of ensuring financial stability. While creating a strict budget can be restrictive, it offers immense benefits beyond simply helping you save more. For instance, it can help you track your spending and make you more accountable for your income. While there are several ways of creating a solid budget, the 20/30/50 rule offers the most tried-and-tested way to save money with your budget. The rule simply suggests saving 20% of your monthly income, leaving 30% for entertainment, and dedicating 50% to taking care of your bills and other essential expenses. While this is a basic rule of thumb, you are at liberty to tweak or customise it to suit your monthly earnings and financial goals.
4. Revisit your budget and adjust your spending limits
If you already had a budget to guide your spending the previous year, you need to take a second look at it and make the necessary readjustments. For example, did you fall short of the saving goals you set last year? Did you end up blowing your entertainment budget? If so, what changes can you make to it this year to prevent a repeat?