Most of us start the new year with a new set of resolutions, which almost always includes a promise to save more. It’s perfectly great to start making new year’s resolutions, but before you make new ones, it may be good to also do a quick look at how you did last year in different aspects of your financial life.
Doing a personal assessment at this time serves a good purpose: it lets you identify areas of improvement and gives you a good starting point from which you can make targeted resolutions. Hopefully, this exercise will let you reach your ideal financial state.
Here are seven questions to ask yourself. Be honest with each one and then do better with your commitments for 2017.
1. Did you have a goal?
The best way to measure your success is to see what you’ve achieved against your goal. A budget also doubles as a goal, as it guides what you should do spending-wise. How close were you to your budget? If you fell short of your targets, what were the reasons that kept you from meeting your goal? If you did not have goals in the past year, then start setting goals now. Have a long-term goal (for the next ten years or more), a medium-term goal (for the next three to five years), and a short-term goal (for the next year or less). Work to achieve all these goals by creating and sticking to a budget.
2. Did you save enough?
Financial experts often say that you should set aside anywhere from 10 percent to 20 percent of your regular income. It would be easy to see how you fared in this area--your bank account or statement of assets would easily reflect this. If you did well here, then try to add more to your regular savings. If you did poorly in this area, then think of the factors that kept you from saving, and think of concrete ways to address these in this new year. For instance, if you were not able to save because you spent a lot on restaurants, then find more affordable alternatives.
3. Did you prioritize needs over wants?
Having sound spending habits is the foundation of financial vigor. Looking back at the past year, can you say that you prioritized important matters and necessities over your whims? It may be worth looking at the purchases you made this year to know how you fared in this area. This is not to say that you should not give yourself occasional treats, but rather, simply says that you should keep unnecessary spending to a minimum so that you can put more money into your savings.
4. Did you use your credit wisely?
A surefire way to get into the debt hole is to buy unnecessary items on credit, which becomes extremely easy when you have a credit card. Examine your credit card usage in the past year, which should be easy to do by simply looking at your billing statements. From this, identify which of your purchases were done hastily, and which ones went into items that you didn’t really need. Then, resolve to better manage your credit card usage.
5. Did you pay bills on time?
Financial wellness begins with discipline, and that includes commitment to meeting your financial obligations, including bills. Paying bills on time saves you a lot of inconveniences and fines, as well as interest costs in some cases. If you’ve been remiss in this area, then institute measures to let you do so. For instance, you can consider enrolling bills in the automatic debit arrangements that most banks and credit card firms offer nowadays. You can also make a simple tracker that you can refer to regularly.
6. Did you invest your money?
Ideally, you should put money into assets and investment vehicles that will help you fund future goals or form your nest egg. If you’ve begun investing, look at ways to diversify or increase this. If you haven’t, then make it a point to start investing some of your savings. There is a whole array of investment vehicles such as mutual funds and equities for first-time investors. Resolve to look at this area of your finances and take concrete steps while you have time on your side.
7. Did you share your wealth?
Most people make their resolutions coming off from the joys of the holiday season, and some if not most make a commitment to share--give more to their parents, or family members or worthy causes that need aid throughout the year. If you made a promise to yourself to give back and share your blessings, make sure to check how you did on this too.
Whether you said yes to all seven or less, the good thing is you have the new year for a do-over. Let’s hope 2017 will be a breakthrough year for your pocket and your financial future.
Grow Your Money is an editorial partnership between news.abs-cbn.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.
Visit www.citibank.com.ph for more information.