5 Ways To Improve Your Finances in the New Year
With a new year comes self-reflection. Reevaluating your approach to personal financial planning can work wonders in making this year your most profitable one yet.
Even if you don’t have an independent financial advisor to help you manage your income and grow your bottom line, some basic changes can go a long way in encouraging lasting habits that lead to financial success.
1. Eliminate Frivolous Spending
It’s a well-known fact, but it can’t be overstated: small purchases add up fast. While paying $20 a month for an unused gym membership may not seem like a big deal, that’s $240 a year that could have been better spent.
A big part of successful personal financial planning is being honest with yourself. Spend some time really looking at your spending, and try to acknowledge purchases that could have been cheaper or avoided entirely.
For example, write down the cost of each and every subscription service you pay for every month, and add up the total. Is the total really worth what you’re getting? If not, it may be time to cancel them. Could the total be cheaper? Look for ways to downgrade the service, negotiate the price, or seek out competitors that deliver the same thing for less.
After you’ve gotten rid of any unnecessary recurring charges, the next step in this personal financial planning process is to analyze your one-off purchases.
Take a deep breath and look at each transaction on your bank statement. Are you going out for food and drinks too frequently? Are you shopping online more than you need to be? Analyze your spending habits, and then remind yourself of that spending the next time you’re about to pull out your card.
If you feel overwhelmed with your spending, you may want to hire an independent financial advisor to help you form a better plan. Approaching your personal financial planning on your own can be a daunting prospect. A good advisor can guide you in a way that instills positive lifelong financial habits.
2. Check and Improve Your Credit Score
Your credit score can play a major role in many aspects of your life — both short and long-term. Knowing your current credit score empowers you to make changes if necessary (or keep doing what you’re doing if you have excellent credit).
Even if you’re not planning on making any major lifestyle changes, improving your credit now ensures that you’re ready if an unexpected change occurs. For example, say you decided to start a small business. You’d want to be able to get a business credit line.
The key to successful personal financial planning is thinking about the future, and nobody knows for sure what the future holds. At the same time, you can take steps to be prepared for anything, and your credit score is one of the most important factors when it comes to getting a loan, getting or increasing credit, and making major purchases.
You’re entitled to one free annual credit report from all three of the major credit bureaus. It’s wise to check one at the beginning of the year, one in the middle, and one at the end. That way you can track your score’s movement and adjust your personal financial planning accordingly.
After viewing your credit score, you may realize that it could use some work. An independent financial advisor can give you advice related to your specific situation, but usually, the best method for boosting your credit score is simply paying your bills on time and keeping your debt as low as possible.
It may take some time, but as long as you embrace positive financial habits on a consistent basis, your credit score should rise over time. Be responsible with your spending, and only use credit cards when necessary.
3. Start Investing
If you’re doing some personal financial planning, it’s easy to be intimidated by the thought of investing your money. After all, investments aren’t always guaranteed, and finding high-potential investments that fit within your budget isn’t always easy.
To many people, investing is a foreign concept that’s intimidating by nature. Fortunately, these days you don’t need to be a Wall Street mogul to put your money to work.
If you plan on investing a significant amount of money, it’s critical that you consult an independent financial advisor first. These days, there are endless options on the table aside from classic stocks and bonds. From peer-to-peer loaning to investing in your professional skills, there are plenty of ways to grow your nest egg with some personal financial planning.
4. Shop Smarter
A little thriftiness can make a big difference in your long-term bottom line. While some expenses may seem unavoidable (and they can be) you may be surprised to see that there are cheaper alternatives if you shop around.
The internet puts countless global markets at your fingertips. If you need to buy something, try a quick search online first. While too much online shopping can be a financial error, using the internet as a tool when you genuinely do need something can save you money.
When it comes to personal financial planning, you often need to reevaluate your situation on a case-by-case basis. Just because you were able to afford an expensive night out last week doesn’t mean you can this week.
Before you spend money, take a quick look at the context. How much money do you have budgeted? What do your bills look like for the month? Do you have backup money if an unforeseen expense arises?
Just because you have the money to spare on a purchase doesn’t mean it’s a smart decision. Be firm with yourself, and only pull the trigger on non-essential purchases when you know it’s the right decision. When buying essentials, take the extra minute to find the best deal.
5. Hire an Independent Financial Advisor
A financial advisor can help drastically with personal financial planning. Whether you’re planning on opening a business or you simply need some help managing your money more effectively, an experienced, knowledgeable advisor can offer advice catered specifically to you.
You don’t need to be wealthy to benefit from hiring a financial advisor. While hiring a financial advisor may seem like an unnecessary expense, it’s important to think about the big picture. It’s quite common for clients to save more money than they pay for consulting services so it can be a solid investment.
Beyond just assisting you in managing your finances, a financial advisor can help you with taxes so you can keep more money and, in some cases, get more back. Financial advisors offer a deep, broad understanding of how you can best save and even a quick consultation can help you with your personal financial planning for the rest of your life.
A financial advisor also gives you peace of mind. When you have someone with an intricate knowledge of finances on your side, you don’t have to deal with financial anxiety. That feeling of comfort and stability is truly priceless.
Financial planning isn’t just about figuring out how to cut spending. Your financial advisor can help you make important financial decisions on your life journey. Next time you’re weighing a financial decision, give one of our highly qualified advisors a call. You’ll never go it alone again.
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The single biggest hurdle associated with personal financial planning is just the act of getting started. The fact that you’re looking for ways to improve your finances in the new year proves that you’re ready to speak with an independent financial advisor.
At Shahen Derderian & Associates, we help you achieve your financial goals while also giving you valuable skills and habits that fit your lifestyle. Your financial decisions can have a huge impact on your future, so don’t make important decisions on your own.
We encourage you to contact us today to request a quote. We’re confident that our skilled, experienced financial experts can assist you with your personal financial planning so you can increase your bottom line in 2019 and beyond. Take control of your finances and grow your wealth. Contact us now.