The New Year has begun and, if you haven’t already put some time aside to take control of your personal finances, it’s not too late to do so.
Here are four simple steps to start the year strong and set yourself up for financial success in 2025 and beyond.
Set Clear Money Goals for 2025
What do you want to achieve financially in 2025? Your goals might include increasing your income, saving for a holiday, paying off debt or starting an emergency fund.
Here’s how to make your goals more tangible:
- Write them down – this will help you get a clear vision of what you want to achieve.
- Have them somewhere you can easily and often see them – on the bathroom mirror, in your office or as a screen saver on your phone. You can even make a vision board of your goals.
- Break them down into smaller chunks – for example, you want to save $10,000 for a holiday in September so setting monthly milestones of saving $1,250 per month will help you stay motivated and make the goal less overwhelming than if you started saving in July!
Take a Good Look at Your 2024 Spending
This activity is a game-changer when it comes to money management. It’s so easy to make a split-second decision to spend money on something we really don’t need, or even didn’t know existed until it popped up on our Insta feed!
Start by reviewing your spending from the past 2 – 4 months. Analyse your bank and credit card statements (you can even export the transactions into Excel and color code those expenses that can be reduced or eliminated).
When reviewing your transactions consider:
- Are there any purchases you wish you didn’t buy?
- Are there any reoccurring subscriptions you can reduce or cancel?
- Can you get a better deal for large expenses such as insurance?
Be the Master of Your Money
Without doubt taking control of your money is fundamental to helping you reach your goals. Having all of your money in one bank account makes it difficult to manage, save and know whether you are able to meet all of your financial commitments when they fall due.
The easiest way to get control is to set up 4 bank accounts and allocate money to these accounts. You can even automate the transfers so you know they will stay consistent.
Bank account 1 – Essential expenses: The cash in this account is to cover your living expenses (e.g., rent, mortgage, utilities, insurance, MV fuel, groceries).
Bank account 2 – Money goals: Transfer money here for saving, investing or paying off debt.
Bank account 3 – Splurge money: This is for the things you enjoy, little treats like going out to lunch, purchasing an outfit you have been eyeing off, a weekend away or anything else you want to spend it on that won’t make you feel like you shouldn’t be.
Bank account 4 – Emergency funds: This is so you have the money for unexpected expenses. An appliance may need to be repaired or replaced, the car service may be more expensive than expected or a friend/family member may need help.
Pay Yourself First
This means you prioritise allocating money to building your wealth first. You may need to go through step 2 ‘Take a Good Look at Your 2024 Spending’ to see what you can cut down on so you have more money for wealth creation.
Many wealthy people prioritise managing their money, so part of it is invested rather than all being spent on ‘stuff’. Of course, it’s important to occasionally splurge and do fun things with your money but that is why you have a ‘Splurge’ bank account.
As 2025 approaches, there’s no better time to take control of your personal finances and set yourself up for success.
If you would like some support to start managing your money book in a time to have a chat – I’m here to help.