It is a commonly perceived notion that the end of the year is the best time to put your finances in place. Get your money in its act together by making these five financial moves before the year is out.
have you been paying your Credit card installments on time? how many new we lend Have you added your kitty? How is your investment portfolio Look? Have you achieved any of your financial goals?
Another year is coming to an end. But before you prepare to ring in the new year with pomp and splendor, we suggest you take some time to evaluate the past year, especially as it relates to your finances. Trust us, it’s not a mammoth task. We’ll help you get a head start. Here are five financial moves you need to make (if you haven’t already) before the end of the year if you want to have a financial fix for the future.
What is the status of your financial goals?
You would have mapped out your financial goals (or so, we assume). How far have you come in terms of achieving them? We understand that some of your goals are long term and therefore would take a while to achieve. However, you must have set some short-term goals as well, right?
Block out a few hours over the weekend to review the status of your goals. This will help you understand what has been working, what is not on track, etc. Also, doing this exercise can help you prioritize your goals or set new ones for the coming year.
Further reading: How to glide through your personal finance goals
Check your budget
You have a budget in place, don’t you? If you don’t, you’d better start working on one. Read this article on how to do it.
For those of you who have a budget in place, it’s important to quickly review your budget before the end of the year. Here are some questions to ask yourself:
- Has it fit your budget?
- Did you have too many unexplained expenses?
- Were you able to save enough after covering your expenses?
- Are there unnecessary expenses that can be cut?
Reviewing your budget can help you understand where you’ve been spending and whether or not your priorities are in place. Based on your review, you can modify your budget for the coming year to maximize savings.
Further reading: 6 common budget mistakes and how to fix them
Evaluate your debts and payment strategy
I’m not trying to be cliché here, but too much debt is bad for your financial health. So how is your debt situation? How many loans and credit cards do you have? Have you been paying your dues without fail? Have you borrowed money from family or close friends?
Well buddy, it’s time to take full control of your finances! This is how you do it:
- The check-to-check habit is not good for your finances. Learn to live within your means. Change the way you spend, cut back, and spend more of your income paying off debt and saving.
- a maximum Credit card? Too many loans on your plate already? Aim to settle your debts. No more taking on new debt, even if it means you have to leave your credit card hidden somewhere in your closet.
- Check your credit report and credit score. Is it messy? It’s time to focus on repairing your credit. Remember that a good credit score and a clean credit history are important to your financial future. Get your FREE Experian credit report in minutes.
Rebalance your investment portfolio
If you want to be rich, you have to invest. There’s no shortcut here, other than maybe winning the lottery, but that again depends on chance.
It is imperative to rebalance your investment portfolio at least once a year. And what better time to do it than at the end of the year. Rebalancing your portfolio is basically like tuning up your car; you will have to rearrange your asset allocation to get back to the original mix. Get it?
Let’s explain investment rebalancing with an example:
Suppose your investment portfolio at the beginning of the year consisted of 70% stocks and 30% bonds. Over the last 10 months, his stock investments have probably performed exceptionally well, while his bonds have not done so well. Now, his allocation can now be 90% in stocks and the rest in bonds. Basically, your portfolio is unbalanced and exposed to higher risks, compared to your original allocation. Doing a rebalancing returns your portfolio to its original state.
However, you should rebalance your portfolio only if your financial goals have not changed. If not, you may want to consider changing your asset allocation.
PS You can always get help from a financial planner if you feel you can’t manage your investments on your own.
Haven’t you started investing yet? Click here for your own personalized mutual fund portfolio.
check your insurance
Change is an inevitable part of life. Getting an adequate amount of insurance can help you get through life’s changes and occasional shocks. Therefore, it’s a good idea to review your insurance at least once a year to accommodate any changes in circumstances. Changes can be anything from getting married/divorced to having a child or buying a new home. Depending on the magnitude of the change, you may want to consider increasing your insurance coverage.
Don’t have insurance yet? Click here for more information on insurance types and plans.
And last but not least, invest in something you love. Hit the gym and get the body of your dreams. Take short trips across the country every alternate month. Plan a long international vacation. Pursue a hobby. Start your own business. Whatever interests you, invest in it. Remember we’ve got your back when it comes to financial assistance. Just click the link below to start exploring.
*First published in November 2019.
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