You’ve taken on the challenge of improving your finances in the new year – congratulations are in order! This article is the last in a four-part series on the subject of seizing the opportunity a new year represents to make significant changes to your financial state. In Part 1, A New Year of Money: Evaluating Your Financial State, I discussed how to discover the current state of your finances. Part 2, A New Year of Money: Goal-Setting to Make an Impact, served as a guide to determining goals while Part 3, A New Year of Money: Implementing Positive Financial Changes, provided support for taking actions that would lead to a stronger financial foothold.
No plan, financial or otherwise, can succeed with a, “Set it and forget it,” mindset. Vigilance is the key to success. Now that you’ve taken the steps to decide upon goals and implement them, it’s important to keep a watchful eye to make sure that you are, indeed, making the positive changes you desire and anticipate. It’s important to put into place a means by which you can measure your headway on those goals. Remember, these types of things can impact the best laid financial plans:
- The unexpected - Loss or decrease of income or higher expenses than expected
- Human nature - Nobody’s perfect. That high-ticket item tempted your credit card right out of your pocket…
- Carelessness - Perhaps you forgot about a payment that was due and now you’ve incurred a penalty or late fee you hadn’t anticipated.
- Errors in judgement - The amount you budgeted for groceries or transportation could have been significantly lower than reality. Maybe dividends from an investment were lower than you’d planned on.
Assess your plan monthly
It’s important that you recognize and remedy these types of incidents when they occur. Gone unchecked, they can easily snowball from a minor blip in your plan to an out-of-control problem. That’s why, each month, you should review your budget to make certain that it reflects your most recent and realistic spending habits. Acknowledge your progress and shortcomings.S
Adjust as necessary
Certain expenses cannot be controlled, even through frugal living and mindful spending. If you need to budget more in certain areas, so be it. Rates for utilities, gasoline, even groceries, are always on the rise – even though your income may not be. You still need power and water in your home; you still need to be able to drive your vehicle and eat, so reallocate some of your “discretionary” money to those categories so that they are always covered by the budgeted amount.
As for the rest of the “monkey wrenches” that can throw your financial goals off target, it’s up to you and your diligence.
- Vow to learn from your careless mistakes and not repeat them.
- Learn the satisfaction of delaying gratification until you can afford to make purchases without using credit.
- Become more financially informed by learning about investing so you can make more profitable investment decisions.
Finances are never carved in stone. The best you can do is the best you can do. Don’t expect perfection from yourself because it will only lead to discouragement. Chalk up mistakes and miscalculations to experience and move on with greater knowledge backing you up. Each effort you make toward spending wisely and managing your resources responsibly is a step toward overall mastery of your financial situation.
Whether your finances are meager or vast, you can make significant strides toward creating your best possible financial circumstances when you take control, learn, remain vigilant and forge ahead.
How do you track your financial circumstances and assess your progress toward goals?