With the new year round the corner, many of us have committed ourselves to changing the way we live for the better. Some of the most important things people focus on, especially in the new year, are personal finance, saving, and investing.
Achieving financial independence is an admirable goal, but very few people know where to start. If you’re starting to take steps towards financial freedom this year, here are seven tips you should follow to set financial goals for the new year.
1. Assess Where You Are
Setting financial goals is crucial, but before you can set any goals, you need to know where you currently are. Look through your savings, debts, and investments. Assessing your financial status may feel stressful, but gaining this knowledge will allow you to set realistic goals for the year.
2. Set a Budget and Stick to it
One of the best things you can do for your finances is set a budget. The budget should be achievable. Make sure that your housing, food, and utility costs are around what you usually pay.
Now is the perfect time to plan your retirement savings as well. More on that in a minute…
3. Pay Off Your Debt
Debt is a significant burden and can prevent you from achieving your financial dreams. Start paying off your debts now.
Commit to paying off debts now, and you’ll be able to keep the money that you invest in the future.
4. Plan for Retirement
Retirement is coming, and you should be preparing for it. You need to discover exactly how much you need to retire. Calculating the exact amount of savings that you need to retire will help put your savings into perspective.
Planning for retirement is always an excellent financial goal, and the new year is the best time to focus on it.
5. Stay Organized
Setting budgets and goals are great, but these efforts are futile if you do not have a plan to stay on track. Staying organized is a critical step to meeting your financial goals this year. There are several tools and budgeting apps out there that can help you remain on track. When it comes to your personal budget, the more organized you are the better.
6. Establish an Emergency Fund
Everyone is vulnerable to unforeseen emergencies. Without proper planning, your budget could fall apart should one arise. If you haven’t already done so, it’s important to establish an emergency fund. This will protect you if you experience any sort of unexpected emergency without breaking the bank.
Your fund should be at least 2 to 3 months worth of expenses. This fund may take a while to establish, but the personal financial freedom you gain from having it is worth the wait.
7. Automate, Automate, Automate
Saving money in the New Year will be much easier — and more efficient — if you set up an automatic withdrawal plan. You can probably set up monthly automatic transfers so that a designated amount is sent to a separate savings account before you have a chance to spend it.
8. Review Your Investment Accounts
If you’re already investing, you’re on the right track.
Now is a great time to get a little education in investing and start making some changes. Do reasearch on ways you can start getting greater returns with less risk.
A great place to start is with our fixed deposit account that earns you a guaranteed minimum interest of 10.5% on amounts from Kshs. 50,000.
This year brings new possibilities for everyone. What do you want to achieve this year? Consider your financial goals and start taking the steps to achieve them now.
This article was originally published in Rule One Investing.