Set your finance goals for the New Year
So, you know that you have to get your finances in order for the New Year, but you're not exactly sure how.
Committing to setting up annual goals is a sign of discipline, but achieving your goals is not easy, particularly if you did not make the best financial decisions last year. When you have debt, a bad credit score, and a low budget to work with in January, it's easy to become demotivated.
Building new habits is a great way to approach your personal finances from a fresh perspective and help you avoid repeating mistakes. Our goals below are perfect for kick-starting your financial health and, if you stick to them, they can help you form good habits for life.
Goals for 2021 and beyond
Prioritise paying off debt
"I'm going to pay off my debt this year."
This is a broad goal that will more than likely overwhelm you. Instead, turn the payment into a process. Allocate a fixed amount every month towards closing your outstanding payments. You can either begin paying off the debts with the highest rate or start by paying off your smaller debts. If this is your first time committing to settling your debts, then you might want to start by paying your smaller accounts before tackling larger amounts.
Read more: Tips to get out of debt
Track your spending
Before you even think about setting up a weekly, monthly, or annual budget, think about where your money goes. What are you spending money on? Groceries? Car maintenance? Fuel? This is a good way to understand what your month-to-month or day-to-day expenses are and how much they actually cost. It's also an easy way to find out where you are overspending.
Tackle bad habits
Eating out every Friday… splurging on payday… using credit cards to pay off debt. These habits might seem insignificant but they can add up and have you wondering, "Where did all my money go?" If this sounds like you, then start tackling those bad spending habits. Cut out unnecessary costs, like eating out every week, and practice sound financial habits instead.
For starters, you could set aside one weekend a month where you commit to NOT spending any money? This is your chance to brush up on your cooking, catch up on the series you missed or finally tackle the mess in your closet — anything that keeps you indoors, away from the temptation to spend. You’ll be amazed at how much money you save.
You could also limit dining out to every second payday. That way, you won’t feel guilty when you treat yourself. Take some time to reflect on your spending habits and where you could improve.
Read more: Tips to cut costs and save money
Check your credit report regularly
Checking your credit report helps you to understand your current credit situation. You'll see what lenders see when you apply for a loan or request to purchase on an account. It's also important that you report any mistakes that might affect your credit score. You can check your credit profile for free on the African Bank website. All you need to do is register online here, and you can access your credit report at any time, from wherever you are.
Read more: How credit scores work
Each year offers us a chance to learn, grow, and improve. It should be the same with your finances. Don't let the mistakes that you made last year negatively affect your financial wellbeing. Feel free to talk to us if you need help with planning your financial goals.