Creating a Financial Plan for your year might not be attached to one of your resolutions, but it’s a critical goal for you to grow financially.
Step 1: Create A Budget of A Normal Month
Start by figuring out what the status quo is. Create a budget of what a normal month looks like for you financially by listing out the normal income and expenses you see every month. If you don’t know or aren’t sure, you can make one for the last two months and decide from there.
Step 2: Determine What Your Goals Are
Are your expenses too high for you to be able to save? Is there a good way to reduce your monthly costs without making significant changes? What about the extra areas of income? Are there debts you can pay off? Whatever your goals, write them down and start to change your monthly spending and income to reflect them.
Step 3: Develop Financial Security
Now that your budget is in a healthier place it’s time to create some financial security. Start setting aside money each month to start an emergency fund in case of unexpected costs. Then start building up your savings account to help you in case of really big emergencies. As you develop financial security, you can be more and more stable and insulated from debt.
Step 4: Start Saving for Big Goals
Whether it’s retirement, homeownership, or even just a new car, you can start saving up for the big financial goals now that you’re financially healthy. Start thinking about how you want to invest your savings account money and begin making long term decisions to grow your money into larger amounts. After all, the more you have, the more it grows.
Step 5: Stay The Course!
Though it is really a great step for any of the previous steps, it is very important to stay the course. Learn from your mistakes, prepare better for emergencies in the future, and determine how and why overspending happens. The most important thing is to stick with it and get better over time so that your net worth gradually goes up.