A financial prep guide for 2019
Updated: Feb 13, 2019
2019 has arrived in full force and those of us who have planned well are likely riding the waves of any financial challenges that have arisen.
The rest may be finding it a little tricky to keep their balance without being swept away by the forces around them.
Either way, 2019 appears to have brought with it a barrage of developments, trends and transformations across the board, which is why you should handle your cash well and be ready for the unexpected.
If you don’t fine tune your money management now, you could come face to face with some harsh financial realities. Here are some tips to help you get a handle on your financial prepping this year.
Prioritise your spending
If you aren’t starting your new year off with a plan, you could be setting yourself up for imminent failure. A budget is essentially a plan that includes the income you’re expecting and the fixed expenses you need to deal with (like the mortgage, insurance and utility bills). You should also consider your savings goals and money for other miscellaneous expenses. A realistic budget can not only fine tune your financial goals but can also remind you of the importance of sticking to them.
This is a part of prioritising. It can be crucial that you either assess last year’s budget or create a new one if you haven’t started yet. Why? Because reviewing your spending habits for last year can help you understand financial obligations based on importance, and help you make better decisions for the rest of this year. Make it a point to keep track of your spending (either through a spreadsheet, item tagging in your checking account or other methods) so that you can take note of what’s what before reinforcing better spending habits this 2019.
Watch out for those surprise expenses
Financially savvy readers may already follow this piece of advice but for those who aren’t too familiar, take note. Unexpected expenses can bog down your money goals and even as you build a solid plan, surprises that pop up along the way may require an emergency fund.
Unexpected expenses may, for example, come in the form of a car accident that leads to hefty repairs, faulty electronics or broken home furniture. Exceeding mobile bills, hospitalisation bills and entertainment bills for outings you weren’t counting on, can all compound into cash lost gradually and if you aren’t prepared for these phantom expenses, you might not be able to control your finances for very long.
The solution? Set some extra money aside that’s outside of your usual budget, and base the amount off of expenses that appeared to come out of nowhere in previous months. It’s your responsibility to help give yourself and your loved ones something to fall back on.
Can you tell between a need and a want?
It may seem blatantly obvious at first but, believe it or not, money mismanagement often includes an inability to differentiate between what you need and what you want. There’s a big difference between a rice cooker that’ll help you eat at home on regular days and going out for drinks at fancy places every weekend. Some may say that needs are subjective but many of them are just justifying actions that really aren’t necessary.
This is why you should identify and hone in on the expenses that you literally won’t be able to live without (food, water, transportation) and between a want that you’re (psychologically) disguising as something you can’t live without.
Similarly, it’s just as important to not incur any new expenses without establishing whether they’re crucial at this point in time.
Catch up with your goals by planning for the future
Base your plan on expectations that correlate with various goals. Whether long-term (purchasing a new car or getting a new home) or short-term, a goal should be seen as the finish line of a part of your financial journey.
How can you best achieve this? For each set of goals, consider different methods of planning and savings. Financial planners (like myself) will often suggest setting up separate savings for each goal, working backwards to determine how much money is required for each goal. Then, decide on a reasonable time frame for you to reach them. This is a foundational aspect of gradual wealth planning.
Holiday spending has to stop at some point
I know it’s no fun but honestly the more you prolong the holiday spending fiesta the harder the toll it can take on your account. Unless you want to be confronted by the possibility of spending the rest of the year paying back your expenses, you should make sure you don’t go overboard.
Instead, consider opening holiday club accounts that have limits and have no minimum deposit requirements. Better yet, schedule a deadline (in advance) for all holiday spending to help you and your family feel obliged to obey the time limit.
These are just some things that you can refer to while preparing a financial guide. As long as you pay attention to often-overlooked details, practice due diligence and have a hint of perseverance, reinforcing your financial strategies for 2019 should be a piece of cake.