Looking for that perfect gift with which to reward yourself after a long, tough year? How about a financial plan for 2024.
A plan for your personal finances is a gift that keeps on giving throughout the year. It gives your money structure, helps to keep you focused on your goals and goes a long way to giving you peace of mind around your finances.
A money plan also keeps nasty financial surprises to a minimum, because you have already factored in most (if not all) of the big things that cost money during the year, such as school fees, servicing your car, birthdays and anniversaries, and going for routine medical checkups.
There are good reasons why December is a good time to think about next year’s finances:
- There is time. Even if you are not on holiday, December is usually a quiet time at work, which means you have less stress and probably work fewer hours. Use this time to reflect on your dreams and goals and link them to a financial plan.
- December/January is when many of us make resolutions for the year ahead. While you are in this mindset, include your finances too.
- When you plan in December, you enter the new year with confidence, knowing that you have a plan for achieving your financial goals and dealing with financial challenges.
- Creating and following a financial plan requires discipline. By starting this process in December, you set the tone for the coming year.
Now let’s look at how to draw up your financial plan for 2024.
- Get pen and paper. Yes, when you draw up a financial plan, you have to write things down. Just thinking or talking about it, won’t give you a plan to work with.
- Start with your dreams and goals. Think about where you want to be in December 2024 (or further into the future) in terms of your health, your savings, your quality of life, your family, and so on. Write down the things you want more of in your life and the things you want less of. A powerful dream or goal gives you the motivation to stick to your financial plan.
- Write down all your financial successes of the past year, such as saving every month, tracking your expenses, or putting money boundaries in place with friends or family members. Also list the things you didn’t get right, such as often buying things that weren’t on your grocery shopping list. Now you know what you want to start doing, keep doing, or stop doing.
- Draw up a calendar of next year’s big money events. These include the start of the school year, birthdays, anniversaries, car services, trips to visit family or go on holiday. Use this year’s expense tracking to help you give a budget estimate to every item on your list.
- Again, use your budget and expense tracking to now write down how much your routine monthly expenses were in 2023. Add 6% to the amounts to account for inflation and write that number down next to each month on your calendar.
- Go back to your list of dreams and goals and decide what you need to do to achieve them. It is possible that not all your goals require money. For instance, if you want a better relationship with your mother, or spouse or child, maybe the biggest job is setting aside time to spend with them. Other goals will require money. For instance, if you want to be debt free by December 2024, work out how much you have to repay every month and write that down.
- Don’t get stuck in too much detail. Just because you don’t know exactly how much you will need for a holiday, doesn’t mean you can’t start saving. Your plan is not a once-off event; you will keep refining it as the year progresses.
- Look at your 2023 monthly budgets and expense tracking to identify where you can cut expenses so that you can allocate that money to achieving your dreams and goals. A powerful goal is worth more than an unplanned night out.
- Spend some time learning more about money and how to better manage it. Learning from other people will inspire you and give you good ideas.
- Involve your family in your planning if necessary. When your whole household work together to achieve a common goal, success is more likely than if you try to do it on your own.
