Budgeting | Financial Planning | Personal Finance | Article
How to Get Your Finances Ready for The New Year!
by Cherry | 29 Dec 2022 | 6 mins read
When was the last time you took at your finances and thought about giving it a serious cleaning up? For most of us, we do look in to ensure that our bank balances are at a healthy level on a regular basis, but we neglect to dig deeper and give all our finances a good scrubbing through.
And like how you would feel when spring cleaning your home, it is something no one looks forward to. But once all the hard work is done, there is a sense of accomplishment and satisfaction. When everything is spick and span, with all the clutter cleared, you’ll know exactly what you have, where they are and have better control over things.
It’s the same with your finances. It is going to feel overwhelming at first, but once you’re at it, you’ll probably find ways that you can spend less and recover lost money. And when you’re done, you’ll have a clearer picture of what your finances look like and how you can better manage your money in the coming year.
Declutter and clean out the unnecessary subscriptions and bank accounts
Start easy by first decluttering your product and service subscriptions. We regularly subscribe to things we think we need and use, or sometimes just because there was a good promotional offer and end up underutilising them or not using them at all. For example, if you’ve signed up for a premium mobile data package that you hardly use because most of the time you are using your home broadband for connectivity, you can consider saving money by downgrading to a smaller and cheaper package.
If we were to cull or right size our subscriptions, we can save a significant amount of money. So, take a hard look and run through them to see if you still use them or use less than what you’ve signed up for. In particular, watch out for subscriptions you’ve only used sparingly in the last three to six months; these are usually the ones that you could save quite a bit on.
The same goes for bank accounts that you have. Most bank accounts have a fall below fee if you don’t maintain a minimum amount of funds. It’s money you really shouldn’t be paying, and you might want to consider consolidating some of your funds.
Do your dusting and uncover any lost money
It is common to overlook what is out of sight and out of mind and this applies to the money you might have lying around in your e-wallets, whether it is from unclaimed refunds or unused monies. This is especially true since most people have more than a few e-wallets, thanks to the many shopping platforms.
If you let your money sit in these app wallets, they don’t earn any interest. Instead, you’ll be better off transferring the money into your savings and deposit bank accounts where you could earn some cash on this money.
Another thing that has monetary value and goes neglected is unused loyalty points that you can use to redeem cash vouchers or products. Most of them expire and get cancelled by a given date if you don’t use them, so you’re losing out on potential “money” if you don’t utilise them.
Reorganise your budget for the new year
An important thing to have to ensure that your finances will be in good shape is to have a budget. If you don’t have one, it’s high time to consider using one, whether it’s the 50-30-20 model, zero-based budgeting or any budgeting style that will help keep your savings on track and your spendings in check.
If you already have a budget, you could reflect on how it has worked for you and whether you have stuck to it. After all, a budget you don’t adhere to doesn’t really serve its purpose. You may also want to adjust your budget to reflect the life changes and needs you’ve experienced in the year.
You can use either a simple DIY Excel file or a budgeting apps to help you organise and keep your finances neat and clean.
Reflect and throw away your bad spending habits
Having a budget is one thing, but that doesn’t mean that you can’t have bad spending habits and not stick to your intended budget.
It’s good to go through your expenses and reflect on how you have spent your money in the past year. Identify the purchases that you probably didn’t need to make, especially those of items that you don’t even see or use anymore.
You should also examine the areas that you have spent larger amounts of money. It would be good to reflect if you could have been smarter with your spending and not spent as much as you did.
When looking at “unnecessary spending”, think about what led you to make those decisions and how to avoid going down the same path with your money again. For example, if you bought a new bag that you hardly use and realise that it was the same day that you had a bad day at work, you might want to consciously remember not to repeat the same purchasing behaviour again.
Deep clean and reset your financial goals for the new year
In our homes, there are usually hidden nooks and corners that go unnoticed on the daily, and they become breeding grounds for bacteria and house pests. To prevent these, you need to do a good deep cleaning.
Similarly, in our finances, there may be issues that need your serious attention that perhaps you didn’t get a chance to address in the previous year due to other more pressing concerns. For example, you might have focused on paying off your debt the previous year and not started saving for your retirement.
It’s a good time to review your financial goals and plans, whilst also looking at your savings and investments to assess if you are in a good financial position, and make the changes needed to have a good upcoming year with your finances.