As 2022 winds down, now is the ideal time to set yourself up for success in the new year. Give yourself time to really look through the past year, what worked, and what you might need to change or adapt in the year ahead.
Taking stock of the reality of your situation, whether you’re where you want to be or not, frees up some room for you to dream, make goals and take appropriate action.
Not sure where to begin? Here are some ideas:
Preparing for the New Year: Where are you now?
For a lot of people, looking at the specifics of their spending can be very intimidating. If that’s true for you, it’s important to realize that without being fully aware of where your money is going, it’s going to be much harder to reach your goals.
Give yourself the room to look at your spending this year without any shame or guilt. Those emotions can often lead to even more avoidance and mindless spending, so set them aside and look at the facts.
Where did your money go? Where did you spend more or less than you expected? How did this year’s inflation affect your spending?
If you’re married or in a relationship, this can be especially difficult – especially if money discussions lead to arguments. Try to set aside a time when you and your partner can look honestly at your money situation, and work together on what you plan to do in the year ahead to improve your situation and reach your goals.
Don’t Forget to Celebrate
With the super high inflation and interest rates this year, just about everybody felt a little more squeezed financially. When that happens, it can be easy to see the bad, like noticing how much more you had to spend on groceries. It’s good to look honestly at your spending, but it’s just as important to celebrate any wins you had.
Maybe you cut back in one area of spending, increased your income or were more consistent with your savings. Look at what you did well, because progress is what’s going to keep you going with your good habits.
Make a Plan for the New Year
Once you know where you’re at and where you hope to be, you can work on a plan that will get you there. I’ve talked before about the power of SMART goals, and how they can help you make real progress.
You should also look at what systems you’ve put in place in the past. Did they fail? If so, when, how or why did they fail? If you know what doesn’t work for you, you can look for what does.
If you’ve struggled with staying on track, you could also seek out the help of a Certified Financial Planner
to assist you in making a plan that works for you.
Increase Retirement Account Savings
If you’ve got a healthy emergency fund in place, look next at your retirement accounts. Are you keeping up with the goals you’ve set for yourself?
Again, don’t beat yourself up if you got off course. Instead, try to create new systems that will help you stay on course next year.
Book Health Checkups
Did you hit your deductible this year? If you did, it might be a prime opportunity to book health appointments before the new year kicks off. It’s also important to use up the funds in your FSA, because not all of that money rolls over to the next year.
Update Your Estate Plan
If this year brought major changes to your family, like births, deaths or marriages, you might need to update the information on your estate plan. Double check that the beneficiaries you have listed are still correct, and add or remove anyone as needed. Here’s a guide to reviewing your estate plan.
Prepare for a Potentially Difficult New Year
We might be heading toward some economic trouble in the year ahead, but don’t panic. We can prepare for that, too.
The basics still apply in a turbulent economy. Top up your emergency fund (aim for three to six months of your typical monthly spending amount,) reduce excessive spending, and avoid knee-jerk changes to your portfolio. Prepare for the worst, hope for the best, and revisit your financial plan when you need to make adjustments.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.
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