During times of economic uncertainty, staying on top of personal finances becomes more critical than ever. Some people kickstart positive changes for the year ahead during January and others know that resolutions can be made anytime.
Understanding how and why we stumble during the improvement of our financial behaviour gives us a better shot at success the next time around.
A mid-year check-up gives us a chance to assess how we're progressing with our financial goals and where to tweak our habits for greater financial success. It's a proactive approach to managing our goals rather than waiting until the end of the year to figure out what went wrong when there's hardly anything we can do before the new year begins.
According to Claire Klassen, Consumer Financial Education Specialist at Momentum Metropolitan, by examining the state of the economy and its potential impact on personal finances, individuals can proactively devise coping mechanisms to weather financial storms. “It is critical for individuals to be persistent in the pursuit of improving their overall well-being. This includes their mental, emotional, and financial well-being. There is a driving need for survival through self-improvement.”
Here are some tips for your mid-year financial review:
Embrace a growth mindset - Financial struggles require a growth mindset. This exercise reflects on one's financial journey, highlighting achievements and areas for improvement. If you do not achieve what you set out to do, for example not using your credit card or making another loan after settling the previous one. Forgive yourself and try again, telling yourself that you are not giving up, you live to fight another day. Watching Podcasts on your favourite social media platform that centre around self-development and forming habits is a great way to start the process of embracing a growth mindset.
“This allows people to adapt to changing economic conditions and develop proactive money management habits. By seeking opportunities for financial education and empowerment, individuals can thrive despite economic challenges,” adds Klassen.
Evaluating Spending Habits and Budgets - In a challenging economic climate, analysing spending habits is crucial for maintaining financial resilience. Conducting a mid-year review of one's budget allows for a realistic evaluation of expenses and income sources. Klassen says that by identifying areas where expenses can be minimised and discretionary spending curtailed, individuals can redirect funds toward essential priorities such as savings, emergency funds, or debt repayment. This evaluation encourages financial discipline, which is vital for navigating the unpredictable economic landscape.
Practically this means printing out a three-month bank statement and going through the deductions noting any deductions that are considered wasteful. For example, having more than one online streaming service in addition to a paid for television subscription may not be the best use of money. Select one that appeals to you most and cancel the others.
Identifying Opportunities for Savings - As the economy struggles, every penny saved holds immense value. This exercise can help identify potential savings opportunities. “By scrutinising utility bills, subscription services, and other recurring expenses, individuals can uncover areas where costs can be reduced. Moreover, this assessment facilitates comparison shopping, seeking out better deals and discounts that can lead to substantial savings,” says Klassen.
Building and Maintaining Emergency Funds - In the face of economic hardship, an emergency fund acts as a crucial safety net. A mid-year financial check-in offers an opportunity to assess existing emergency funds and strategise for their growth.
“By consistently contributing to an emergency fund, individuals safeguard themselves against unforeseen expenses or financial setbacks in an unstable economy. An adequate emergency fund buffers economic uncertainties, providing peace of mind amidst turbulent times,” adds Klassen.
In a struggling economy, a mid-year financial check-in emerges as a beacon of financial empowerment and resilience. Embracing this powerful tool allows individuals to navigate financial turbulence with confidence, strengthening their financial footing amidst economic uncertainties.
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