The start of a new year is a perfect time to set goals for the next 12 months, and this is no different when it comes to your finances. Here at Kara Accountants, we’ve come up with some resolutions that you can make in order to help you take control of 2021 from a financial perspective.
Great financial planning begins with an even better organisation strategy. Take a look at your files, paperwork, and other plans and make simple summaries of what you own, owe, receive, and spend and you will begin to find ways you can save money. Overwhelmed by all the paperwork? Why not store everything digitally – it’s better for the environment, too!
Create a budget
View your lifetime finances like a cash flow – money will flow in and out and you will need to be able to manage this. We suggest that you look at the following three things when creating a budget: how much you are taking in after taxes, how much you are spending, and how much you are saving. This will help you dictate weekly, monthly, and yearly budgets plus where and how you should be spending.
The benefits of creating a budget are that you can map out your predicted financial spend for the next year and ensure that you can spend within your means, whilst making sure you are able to save for future endeavors and additional expenses.
Build your savings
If 2020 has taught us anything, it’s that life is unpredictable! 2021 is a great year to really look at your savings and start building these to ensure that you will be covered for any emergencies. Look at what you can set aside each month and vow to yourself to only use this money if absolutely necessary, or set yourself a target to save up for something special.
Plan a regular ‘Money Day’
Ken Okoroafor, found of The Humble Penny advises that you should choose a specific day each month as a ‘Money Day’. This is a regular conversation with your partner where you answer these three questions: What were our income sources last month? Where did all our money go? What is our current financial net worth? This is to improve your relationship with money over time and make financial discussions an important part of your life each month. It’s also a great chance to take a look at your budget and goals too.
Look at your pension
Planning for your retirement is very important, so if you haven’t started your pension yet now is definitely the time to do it! The earlier you start, the better off you will be in the future. Check how much you are contributing, whether that’s through employee contributions or privately, and make sure that you are saving accordingly.
Make little savings for big results
Due to the COVID-19 pandemic, many of us are now working remotely or at home. You’re probably saving money on fuel, public transport, or takeaway coffees, but your energy bills and other costs of being at home will increase. Take a look at another one of our blog posts by clicking here, which is all about how to save money whilst working from home, and learn how to make small changes that will make a big difference to your finances!
We hope these tips will help you make some financial resolutions for the next twelve months ahead. Everyone at Kara Accountants wishes you a Happy New Year, and if you require any financial services or advice please do not hesitate to get in touch!