Rose Miller, lead for financial empowerment programmes at the JN Foundation, says the New Year presents an opportunity for persons to reset and re-evaluate their finances.
“The new year offers an opportunity to reflect on the past and set goals for the future. Revisiting and re-evaluating your financial and other personal goals can help set you up for success in 2023 and beyond,” she informed.
Mrs Miller recommends the following five ways to start the New Year on sound financial footing:
Re-Examine Your Budget
She advised that re-examining one’s budget can assist in figuring out where one needs to make adjustments. She said by taking stock of one’s income and expenses and if and how one expect those to change in the New Year, one would be in a good place to determine what will be required to reach one’s goals. She cautioned that, among other things one will need a high degree of discipline to be successful.
Start a budget and track your expenses
She noted that if no budget was established last year, now was the time to create one. “Creating and sticking to your budget could be one of the best things that you can do for your finances in the New Year. Budgets force you to take a hard look at the money that you bring in, the money that you shell out, and the money that you may owe,” she said.
If you have never followed a budget before, the thought of starting one can be daunting. The truth is, budget is a useful tool. In the words of John Maxwell, “A budget is telling your money where to go instead of wondering where it went.“ Once you get used to following a budget, you can begin finding ways to free up cash to put towards your financial goals which will help improve your financial security.
Establish and maintain your emergency fund
Mrs Miller pointed out that the importance of having an emergency funds cannot be over-emphasized. She said it is also equally important to understand what constitutes an emergency – an important and unexpected incident. “If the purpose of having an emergency fund is truly understood it will not be used for unintended purposes and the need for replenishment, to ensure that this safety net is in place, would be readily appreciated,” she said.
The financial empowerment team lead said that for the New Year, building wealth should be a priority area, and this can be accomplished through investment. “While it may not be the easiest resolution on this list, investing is the key to building your wealth,” she added.
She recommended consulting a financial advisor who can help to decide on an investment plan compatible with your age, goals and risk tolerance, among other considerations.
Make Planning for retirement a Priority
Another critical area of focus for the New Year must be retirement planning. She reminded that retirement planning must begin early; “When you are young, saving for your retirement probably sounds like the least exciting thing that you can do with your money. The truth is, money needs time to grow hence the sooner you start, the more secure you will be when your retirement comes. Investing in your retirement means that you are investing in your future,” she said.