Most of us start each year with great plans, but the problem is most of them are not executed. In January, you had a clean slate and planned to start afresh.
To do this you would have to start by listing the personal, financial and professional goals that you wished to accomplish this year. Often these plans fall by the wayside.
To prevent this, you need to ask yourself if you have made any progress and you need to review your goals.
lt is important to periodically monitor the progress you are making with your finances. The halfway point of the year is a good time to reflect on your goals, take stock, and determine if you have lived up to your own expectations. lt is an opportune time to identify any festering problems and start to make adjustments if necessary.
With barely six months left to go this year, if you have not made much progress, it may seem overwhelming. Try to find some time for yourself- an hour is all you need -to review your finances. If you have made some progress in the goals mentioned below, you are on the road to financial health.
The first step to take is to put a budget in place. A budget is one of the hardest things to prepare; yet it is one of the most important steps to take to address your personal financial issues.
Do you have a clear idea of how much you are spending each week or month? Have you tracked your expenses for a period and developed a clear picture of what can be cut back?
You can use one of many online tools or just simply get out a notepad and track your expenses on paper. You will make much more progress if you have a clear idea of where all your money is going.
Reduce Your Debts
The second step is to try and reduce your debt. Do you carry less debt today than you did at the beginning of the year? Until you start to face up to your debt, it will continue to grow.
The general rule of thumb, and the fastest way to reduce your debt, is to tackle your highest interest rate debt first. By automating your debt payments and making incremental principal payments each month, you will soon find your debt is under control.
Don’t ignore your debt or wish it away; if it becomes a burden, approach your lender and discuss the possibilities for rescheduling to make it more manageable.
The final step is to start building your savings. If you don’t have a budget in place and you haven’t paid any attention to your debt, it will be difficult for you to save; they are all connected. You need to find the discipline to draw up a budget and reduce your debt before you can increase your savings.
Most financial advisors suggest that you should save at least 10 to 15% of your income. Have you built an emergency fund over the past six months? If you are suddenly faced with unexpected job loss, major car repairs or medical expenses, you will be better prepared to cope with it if you have this cushion to fall back on.
The easiest way to grow your savings is to automate it by putting a direct debit in place so that you won’t be tempted to spend all your income. It will instead be directed to an appropriate savings vehicle. Most mutual fund companies make it easy for you to be able to do this with your savings and investment plan.
The difference between those who attain financial security and those who do not is simply the discipline to take control of their financial situation. If you are on track, congratulations! If not, don’t worry, there is still some way to go this year to put things right, but you need to get started now.
This article was written by Nimi Akinkugbe and appears courtesy of Corporate Golf Magazine and was sponsored By FBN Capital Asset Management, as published in Forbes Africa June 2014.