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Welcome to the new year. Next up is the starting gate for his 365-day race. We’re tiptoeing toward the irrepressible optimism of a new year. Everyone will say, “This year is different than usual.” But let’s pause for a moment — is that really the case? Without a solid game plan, you’ll just be running blindfolded.
Today, let’s take a closer look at 9 things you should never do at the start of a new year. No, we’re not talking about the usual suspects like hitting the gym or redecorating your living room. Let’s focus on something less flashy, but important: finances.
The conclusion is this. To truly move forward this year, we need to dust off the neglected and cobwebbed corners of financial institutions. Things that we conveniently ignored or barely looked at. They are the game changers. Let’s dive in.
Related: This key idea will help you conquer your personal finances
1. Not insured
It’s like going into a storm without an umbrella. Don’t have insurance? You’re asking for trouble. A single accident can lead to a financial deluge. The solution is simple. It’s about taking out insurance. Health, car, home — cover your bases. It’s not just smart. It’s essential.
If this seems like too much work, hire someone to do it for you. Ask your broker to analyze what is best for your situation. It may cost you a dollar more, but it could save you thousands of dollars if you weren’t insured in the first place.
Bonus points: Get your family involved in the new year. Not only is this a lifesaver (literally) for you and them, it may also offer some discount benefits for all of you.
2. No emergency fund
Imagine your car breaking down or needing unexpected medical expenses. Without an emergency fund, you’ll be stuck with debt problems. The strategy here is simple and straightforward: build your capital. Aim for a cushion that can cover three to six months’ worth of expenses. It’s your financial shock absorber.
Not sure where to start? Consider opening a bank account that automatically deducts $50 from every paycheck you receive. If you find this difficult, call your bank and ask them to set it up for you. The key here is to set it and forget it (until you need it).
3. Not planning for taxes
Taxes can become a ticking time bomb if ignored. Waiting until the last moment invites stress, mistakes, and penalties. A smart approach is to tackle taxes year-round. Track your expenses and deductions. It’s about turning a headache into a manageable task.
Let’s break it down briefly. The best strategy here is to contact a reputable tax professional who can walk you through the details. All you have to do is hire a professional to come up with a plan and then execute it. Again, the upfront costs are higher, but the savings can be significant when tax season approaches.
4. Credit card payments are minimal.
It’s a trap! If you set a minimum repayment amount, you will be stuck in a never-ending cycle of debt. As interest increases, what used to be a molehill turns into a mountain. It will be released by repaying more than the minimum amount. Even better, settle the entire amount every month. It’s a smart way to reduce interest costs.
Treat it like an emergency fund. Funds are automatically allocated from the salary you receive. This way, when you check your balance, you’ll know what you’re comfortable spending.
Related: Can you spare 15 minutes? Improve your financial health with these simple tips.
5. Not having financial goals
A voyage without a destination will lead you nowhere. Without financial goals, your savings and investments become purposeless. Set clear and achievable goals. Whether it’s a down payment on a home, a dream vacation, or a comfortable retirement, having goals provides direction and purpose for your financial efforts.
If you don’t know what this will look like, start by saying what you don’t want. It can be anything from debt to stress to financial constraints. Then turn this into a goal to avoid this year and you’ll have a good starting point.
6. Don’t check your credit score
Your credit score is your gateway to financial opportunity. Ignoring this can lead to embarrassing situations in the worst case scenario (e.g. loan rejection). Regular checks are essential. It’s about proactively addressing problems before they become problems.
Make it easy for yourself. Get your accountant to do this for you. Now he has one bonus. Set this as one of his previous financial goals for this year. Talk to your accountant about what you can do to improve your score. Then put it into action.
7. Don’t invest
Leaving your money sitting in a low-interest savings account is a missed opportunity. Inflation can reduce the value of your savings over time. Investing offers the potential for huge returns. Research, understand your risk tolerance, and start leveraging your money.
If you have never invested before, join an investment group. You might get great insight into opportunities, get an education, and find a great network.
8. No budget
Driving without a budget is like driving with your eyes closed, you don’t know where you’re going until you crash. A budget is a financial roadmap. It helps you track your income, manage your expenses, and stay on track towards your financial goals.
The best source of information to help you create a budget is you. Look back at your bank statements. See where your money went last year. And aim realistically. He cuts unnecessary expenses by $50 per week, which is a victory in itself.
Related: 3 tips for stress-free money management
9. Ignore your debts
This is a one-way ticket to financial stress. Unchecked, debt grows, interest compounds, and before you know it, you’re stuck. solution? Face them head on. Prioritize high-interest debts, create a repayment plan, and stick to it. It’s about taking back control.
Book your account as soon as it opens in January. Help them understand the reality of the clouds looming over their financial freedom and make a plan to follow it. Remember: If it’s too difficult, hire one.
So let’s have a toast to the new year. Let’s think about not only what the new year brings, but also what you should avoid to make it truly great. Let’s make this a year where we choose wisely, are financially fearless, and the only failures we skillfully avoid. I wish you and your family a prosperous (and financially prosperous) year ahead. Have fun with financial planning!
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