New Year’s marks a clean slate for many people.
The start of any new year naturally brings about many new opportunities, resolutions, and goals.
It symbolizes an opportunity to start anew, set new goals for yourself, or make a significant change within your life.
Come January 1st, people will flood gyms, take steps to change their careers, or make a point to break a bad habit.
While these are great goals and aspirations, another facet of life you should look at come January is your finances.
Between making a point to start fresh, setting new financial goals, and just overall preparing for the coming year, reexamining your finances in the new year can help you start off on the right foot.
Here are six important reasons you should examine your finances in January.Why not use the new year momentum to examine your finances and set goals Click To Tweet
1. To Figure Out Where You are Financially
Before you can start making plans financially (or otherwise) for the year, it’s a good idea to evaluate yourself and see where you stand.
It’s easy to get swept up in the holidays, which usually causes people to stop paying close attention to their budget and finances.
Take January as an opportunity to reevaluate your checking account and savings. Look back through your budget from this past year. Examine things carefully and decide if your budget and habits are still right for you. This way you know where to go and how to manage your money moving forward. It’ll set you up properly for the entire year.
2. To Start Anew
As I mentioned earlier, January is the month of resolutions. It’s the month to restart and alter anything in your life that hasn’t been going the way you want.
If you want to make a resolution to spend less or save more, make a point to be more specific and figure out a plan for the coming year. We all know that if you don’t make a plan, it probably won’t happen.
Upon taking a look at your budget, decide whether or not your original plan is still working for you. Then use the beginning of the new year as an opportunity to create, or recreate your budget and spending plans.
Of course, it’s important to remember that budgets should be flexible. So don’t be afraid to alter your plan as the year goes on if something in your life changes.When you're planning for the new year, make sure to take finances into account! Click To Tweet
3. To Evaluate Your Situation & Set Your Goals
Along with creating or altering your budget, one of the other big reasons for examining your finances in January is to set your life and financial goals for the year.
Evaluate where you ended up the previous year and decide what your next financial step is. Whether you want to finally eliminate your debt, buy a car, or save up for a home, figure out what you’d like to save for or put your money toward in the new year.
By setting up a plan for your financial goals right away, you won’t feel as pressured to save large amounts for purchases later in the year. Instead, you’ll be able to save a little all throughout the year, making your end-goal seem less difficult to tackle.
4. To Prepare for Tax Season
While it may seem like it is still months away, tax season is right around the corner. Instead of waiting until the last minute and rushing to get your finances in order, why not get a head start in January?
Take the new year as an opportunity to examine your taxes and get ahead of your bill. If a refund is in your future, you may want to consider upping some of your contributions to savings or retirement funds.
But if you know you’ll owe come tax season, it’d be helpful to start saving now so you’re not hit with a large bill in April that you’re unable to pay.
5. To Review Your Expenses
Like most functioning adults, you probably have certain expenses and bills that come out of your paycheck each month. Whether that is your gym membership, TV subscription service, insurance, or Internet bill, it’s always a good idea to reexamine your expenses to ensure they’re still the right plans and options for you.
That being said, there’s no better time to look over your expenses than at the start of the year. Examine any plans you currently have and consider shopping around either at different companies or plans to see if there’s any place you can decrease your spending.
You should also be able to spot any place in your expenses that you need to adjust for your income or situation. By doing so, you could save yourself a lot in the coming year that can be put toward other things instead.
6. To Review Your Investments
Along with your expenses, now is a great time to review your investment portfolio as well. The idea with this is that the sooner you get yourself set up with good investments, the longer period of time you have for your investments to grow.
Take the first of the year to look over anything your money is invested in. See what’s still going strong and which stocks and companies have declined. Now is a good time to sell anything that’s shown poor performance and reinvest in better opportunities to help your portfolio grow.
Although many of these are things you could do any time of the year, completing them in January will only serve to benefit you as the year goes on. Since January is often the time many people take to reexamine their lives and start new goals and aspirations, why not use the new year momentum to add on to those goals and add some financial ones?
As your life changes, so too should your financial portfolio and budget, and they’re bound to change year to year. So, start off on the right financial foot by carefully evaluating your financial situation and lifestyle come January.
Do you examine your finances at the start of every year? What are some things you find that tend to change from year to year?