Budgeting | Financial Planning | Personal Finance | Article
How to Get Your Finances Ready for The New Year
by The Simple Sum Team | 29 Dec 2022 | 4 mins read
When was the last time you looked at your finances and thought about giving it a serious cleaning up? For most of us, we do check our bank balances on a regular basis to ensure they are at a healthy level, but we neglect to dig deeper and give our finances a good scrub through.
And just 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, you’ll have better control over your money.
So, although it may feel overwhelming at first, once you’ve got the hang of it, you’ll have a clearer picture of where you stand financially and how you can manage your money better in the coming year.
Declutter and clean out unnecessary subscriptions and bank accounts
Start by decluttering your subscriptions. We regularly subscribe to things we think we need, or if there was a good offer on an item. Unfortunately, we sometimes end up underutilising the item or not using it at all.
For example, if you signed up for a premium mobile data package but hardly use it because you are at home most of the time and are connected to your home broadband, you can consider downgrading to a smaller and cheaper package. You can save a significant amount of money simply by doing this.
So, relook your subscriptions and understand what you signed up for. In particular, watch out for subscriptions you’ve only used sparingly in the last three to six months.
Do your dusting and uncover any lost money
It is common to overlook what is not in sight – out of sight, out of mind, right?
Something that is of monetary value that often goes neglected is unused loyalty points that you can use to redeem cash vouchers or products. Most of them expire and get cancelled after a certain 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 that keeps your finances in good shape is a budget. If you don’t have one, you should consider using one, whether it’s the 50-30-20 model, zero-based budgeting or any budgeting method that can help keep your savings on track and your spending in check.
If you already have a budget, reflect on how it has worked or not worked for you. You may also want to adjust your budget to reflect the life changes you’ve experienced in the year.
Reflect and throw away bad spending habits
It’s good to go through your expenses and reflect on where you spent your money this year. Identify the purchases that you probably didn’t need to make, such as items you bought that you rarely used.
When looking at “unnecessary spending”, think about what led you to make the decision to buy it 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 realised that it was purchased on 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.
You should also examine the areas where you 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 there.
Deep clean and reset your financial goals for the new year
In our homes, there are usually hidden nooks and corners that go unnoticed, which become breeding grounds for bacteria and pests. To prevent this, you need to do a good deep cleaning.
Similarly, with 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 and thus didn’t start saving for your retirement.
It is good to review your financial goals and plans, whilst also looking at your savings and investments, to assess if you have good financial health. If you find yourself lacking in any of the areas, take heed and make necessary changes so you’ll be better off financially next year.