For all of us the New Year represents a lovely, large, blank canvas, which is all yours to paint in whichever colors you choose. So what do you want to achieve in 2014? A good New Year list will of course include financial goals for the year ahead. This might be to save more money, to pay off your mortgage or to clear any outstanding debts. Whatever the financial goal – setting out clear parameters on paper will inevitably help you to do this.
I have always been a serial list writer. In-fact I often took it to strange extremes, writing down things that would normally constitute part of most people’s average day. My friends found it hugely amusing that I took great pleasure in writing down the most obvious of tasks, such as ‘clean teeth’ or ‘take a shower’ alongside much more serious complex work tasks. I also took no better satisfaction from list writing than over the Xmas and New Year period.
For all of us the New Year represents a lovely, large, blank canvas, which is all yours to paint in whichever colours you choose. So what do you want to achieve in 2014?
There is no better time than the month of December to sit down and write a list. Yes, of course you should enjoy the party season and drink as many glasses of mulled wine as you can stomach, but once the hangover fades it’s the perfect way to get you in the starting block for your year ahead.
A good New Year list will of course include financial goals for the year ahead. This might be to save more money, to pay off your mortgage or to clear any outstanding debts. Whatever the financial goal – setting out clear parameters on paper will inevitably help you to do this.
You should be specific. How do you intend to go about reaching these objectives? Don’t be intimidated by your own ambition; break each goal down by month. Seeing your financial goals for the following year in black and white will put you in a stronger position to actually achieve what it is you set out to do.
It is one thing to occasionally think that you would like to save more, and even to discuss it with friends, but making the effort to sit down with a blank piece of paper and draw the next year from a financial angle, even before it has started is quite another. But where do you start?
Create a Budget
If you are serious about organizing your finances in 2014, then the most obvious yet crucial place to you must start is by creating a budget. This should start by taking a note of your earnings, as well as any bonuses or allowances such as a company car, or housing allowance. You will then need to work out all of your outgoings, from utility bills to children’s school fees and money spent on entertainment. Once you have recorded all of this information you will have a true representation of the amount of disposable income that your salary produces each month. A good way of being as accurate as possible is to list out all the certainties each month such as your mortgage or rent and then for every other purchase keep receipts. At the end of a month if you add up all of your receipts you will have a pretty accurate picture of what you are spending. You may be very surprised! If you don’t know how much you have to spend each month, then how can you make financially responsible purchasing decisions? It is imperative you are accurate and honest and that every bill or expenditure is recorded. If your budget is entirely accurate and based on facts then it has a greater chance of succeeding. From here you will clearly be able to see where, perhaps you should be cutting back a little. At the very least you will be able to see what surplus capital you have left each month and therefore how much you can realistically save.
Embrace Technology to help you Budget
Having your budget in place is one thing. Maintaining it is quite another. Fortunately, technological advancements in mobile media have made budgeting even more accessible, so that you can track every financial transaction as it happens. Using even the most basic Excel package can provide a flexible and customized working budget, while iPhone apps such as MoneyBook allow you to track your financial activity. These apps are relatively easy to use, even for the not so tech savvy. They could really help you to turn a financial New Year’s resolution into a long-term commitment.
Reward yourself and keep going
Some financial goals seem so far away it is hard to see the light at the end of tunnel. Such as planning for retirement. It is all about taking smaller steps to reach the bigger goals. Ultimately these smaller steps will help you to reach those bigger financial aspirations but it doesn’t all have to be hardship. Why not reward yourself? When you pay off a particular debt you could reward yourself with a family holiday. Or when you are able to commit to saving a certain percentage of your salary each month towards a pension, this is a milestone achieved, so why not reward yourself. However once you have achieved what you set out to do don’t stop there. It is then time to set higher goals.
The Bottom Line
The New Year is a great time to start afresh with your finances, but you need to be prepared to persist with your budget plans until they take effect. It takes time to seek out financial savings and maximize your income. Any financial goal is really all about making your money work harder for you. Once you have a clear idea of your surplus capital you will know how much you can afford to realistically save each month. Then it is a case of sticking to it.
Now I am not for one minute suggesting you need to write a list that includes your daily hair washing ritual or feeding the kids but writing a list that includes financial goals is a great way to start the year and will help you to get more from your hard earned money.
Jessica Cook is a well established and respected Private Client Adviser based in Dubai. Having had a diverse career, she obtained a law degree and began work for a large legal practice biased in London, where she specialized in Criminal Law and Family Law. Jessica then went on to spend 7 years working for the Financial Times in London. With a wealth of knowledge and experience behind her, Jessica now believes she has finally found her passion in the world of finance and runs a successful financial advisory practice based in the UAE.