Basic Cents, Features

Preparing Your Finances For 2016

By Samuel Rosenberg

You don’t need December 31 to remind you to set your resolutions for the following year, but it does provide a handy reminder that if you really wish to meet your financial goals in 2016, it is time to plan. Where you don’t plan ahead, drifting from one year to the next may lead your finances into a desperate hole.

Consistently, financial advisers on all levels suggest that individuals should prepare a budget for all of your day-to-day finances and to formulate plans for your more substantial financial goals that may take years to plan for.

To prepare properly for 2016, it is better to compare your budget for the past year against the actual figures that you have achieved both in income and your regular and irregular expenses. Now is a good time to see how well you have done and to consider changes to your budget for the year ahead where either your previous planning was incorrect or your goals have changed.

A comparison of your budget and the real figures that you achieved is essential for you to be able to understand where your income comes from and where it goes.

December marks the end of the personal income tax period, and is time for you to get your documents in order ahead of the required filing early in the New Year. The accuracy of these figures is evidently essential to ensure you do not over or under pay your personal income tax. It is also the perfect time for you to reconsider the goals that you set and decide whether you need to alter your plans to help you attain these goals in the future.

Some goals are very short-term, like clearing a small debt, but other goals may require three to five years of planning for you to build up sufficient funds for a deposit towards the purchase of your own home or perhaps retire a little earlier than expected so that you can enjoy time travelling around the world.

Should you look back five years ago, what were your goals then and what have you achieved in the meanwhile?

Five years is a relatively short-term to plan for your future, but it does give you the opportunity to prepare an emergency fund so that you can cope relatively easily with an immediate need, from your own savings. This might mean you can cover the cost of an operation in a hospital to get you back to work quicker, rather than waiting a few months and losing income in the meanwhile. Alternately, the fund might provide funds to repair your vehicle to keep you on the road and continue to be able to earn an income.

By analysing your previous income and expenses, you will be able to revisit your specific goals and check whether they are still achievable. You may need to adjust the amount you are saving towards your own property or perhaps funds for your children’s university life. You may decide to direct more money towards clearing debts much earlier.

By preparing your finances and analysing your budgeting you will remain in control of the money arriving and leaving your bank account and still achieve all of your goals on time and exactly as you planned.

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