It’s the perfect time look back and reflect on your finances and do a year-end review so that you can have your best financial year yet. Typically you do this at your job, especially in the corporate environment.You do an assessment of what went right, what went wrong and you set your goals for the new year.
In this blog post, I wanted to walk through how you should conduct your own year-end review and then how to evaluate what you should be doing going forward in the new year to start working towards your goals.
If you were to break your goals out into the following four categories and then give yourself a rating from 1-10 how would you rank yourself?
If you set income goals for the previous year, how did you do? Did you make as much as you set out to make?
Granted, we always want to make more, but looking realistically at where you are and what you wanted to do for the year in regards to income, where did you stack up? Did you maximize your income and earn as much as you thought you could?
Then looking forward to next year, set some new income goals. How much more can you earn next year and most importantly how will you earn more next year? It’s really important to figure out the how part. Can you work extra hours at your job or start a side hustle?
How did you manage your expenses this past year? Where did you overspend and was your spending aligned with your goals? If not, what can you do differently in the new year?
Sometimes you already know where you overspend without having to pull out a calculator or spreadsheet. You probably already know if you are going out to eat too much or if you are spending too much time at Target. Regardless, there is nothing more real than seeing the actual numbers in front of you in the form of a budget. This is why a budget is so important because it really allows you to see and direct where your money is going.
Hopefully, you have a budget or use some kind of budgeting app. If so, you can go back and look at your previous spending and evaluate your behavior. If you don’t have a budget, this is the perfect time to start. Its one of the most important foundational things you can do on your journey to Financial Freedom.
If you are still struggling with a creating and maintaining a budget, I urge you to take a join my Budget Boot Camp which will help you finally have a successful budget.
How much were you able to save and invest last year? What are your saving and investing goals for the new year? Do you want to work up towards maxing out your 401K and/or Roth IRA? Do you want to pay down more debt, which you can consider a form of saving/investing?
Set up specific targets and deadlines so that you can be held to your savings goals.
What good habits did you pick up this year and what habits do you want to leave behind? What sort of habits do you want to improve upon or develop?
Starve Your Distractions & Feed Your Focus
What are some of the things that are distracting you from reaching your goals, what helps you focus?
Some examples of habits to focus on for the new year are; reading more, waking up early and cooking more at home. All of these are ways in which you can enrich your life and improve your financial standing.
In order to have your best financial year, you need to take the time to reflect back and plan ahead. Use the four categories of Income, Expenses, Saving/Investing and Habits as your guide to organizing your goals and you will really be able to map out what to do to gain the most momentum in your finances in the new year.
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