Life is so fast-paced, it can be rare these days for us to sit down and take stock of things, especially when it comes to our money. So take 5 minutes now to answer these five questions and reflect on your finances.
1. What do I tell myself about money and where did I get this message from?
“Money is the root of all evil.” “I’m not good with money.” “Money can’t buy happiness.” “Money is security.” “Money is scary and stressful.”
We all have different thoughts and attitudes about money, and they influence our behaviour and the decisions we make. Our financial habits can often be traced back to these thoughts, and are often self-fulfilling prophecies, such as the person who always spends because they think “I’ll never have money”. Work out what messages you are repeating to yourself, and try to work out where they came from - perhaps parents, family, friends or advertising and media. If you’re not happy with this self-talk, pick a new message to take into the new year, such as “Money is a tool for me to achieve my goals.”
2. Am I happy with where my money went this year?
For some of us, this requires a more fundamental question - do I know where my money went this year? Do a financial review of the year, or look back at your bank account statements.
If you’re not planning where your spending is going then it’s easy to spend mindlessly and feel disappointed with what you have to show for it at the end of the year. Honestly reflect on your satisfaction with the purchases you have made in 2019.
3. What is the one financial thing I want to tackle next year?
Pick a financial goal and work backwards. How much do you need to put aside each month to get there by 31st December 2020? Then open a nice shiny new savings account or pot, and give it a name based on that goal. Set up a standing order to go for your first pay of the new year. Or, if your goal is to pay off debt, start looking around to see if you could be getting a better deal, or accelerating your repayments.
4. Am I on track to meet my long term goals?
As well as thinking about a goal to tackle for next year, also have a think about how you’re progressing with any bigger multi-year goals, such as saving for a first home, home renovations or retirement. If you’ve got no idea where you are with your pension - check out this pension calculator. Consider increasing your pension contribution if you’re not happy with what you’re going to end up with. Increasing contributions when you get a pay rise is a great way to boost your pension contribution without feeling the pain on payday.
5. Who is my accountability buddy?
Peer pressure can be a good thing! A 2015 study from Dominican University found that sharing your progress with a friend can help increase the likelihood that you’ll achieve your goal. It’s hard to stay motivated by yourself, so surround yourself with people who will cheer you on as you strive to reach your financial goals in 2020.