This is an extraordinary start to the year because, in addition to the typical imbalance after the Christmas holidays, this January is accompanied by the shadow of a global health crisis with a strong economic impact, expressed in the loss of jobs and the increase in poverty. 

At the same time, we have to say that 2021 stands as the year that promises to make it possible for us to turn the pandemic into a ghost, so in some way it finds us with a suitcase full of beginnings, high desires, and renewing purposes.

In this atypical context, we must be particularly aware of our responsibilities and limitations when planning our finances.

What if this time we throw away the old practices that we abandoned in a matter of days and approach things differently? In this post, we suggest a few steps with which you could open the doors to a truly prosperous, or at least stable, 2024.

1. Be aware of the state of your finances

Many personal financial problems could be avoided if you take paper and pencil and simply subtract your expenses for a month from your regular income for the same period, if you identify items of expenses and weigh their importance, or if you carefully study the account statement of your card.

Mere observation and simple arithmetic operations could give you invaluable clues as to whether your pocket has a hole and how to fix it, or whether you have savings or investment opportunities that you are not taking advantage of properly.

It is advisable to start from the criterion that financial health depends more on how you use resources than on how much you earn. A six-figure salary is not synonymous with financial health. Rather, it can give you a false sense of immunity to the virus of personal financial ruin, which, whether we like it or not, always has the possibility of infecting us. Likewise, a reduced income, although it implies more limitations, will yield more if you spend carefully.

2. Make a budget

Making a list of your recurring expenses may not be the most fun option for Saturday afternoon. But if you think about the headache that a stressful situation for financial reasons causes or could cause, you might shake off your laziness.

The budget is one of those steps that you cannot skip if you want to embark on the journey to the land of financial peace of mind.

It is simple. You just have to commit to yourself in writing to allocate, each month, a certain part of your income to previously identified needs.

3. Save for the unexpected

Assuming that your plans will go smoothly is being naïve. Emergencies arrive without warning and can shake even the best-organized budget.

A wise decision is to be realistic and save for unforeseen events, avoiding falling into a spiral of budget imbalance, debt, and discouragement from which it will be difficult to escape.

Remember, if you anticipate unforeseen events (forgive the contradiction) you will prevent them from becoming financial blows, allowing you to solve them in a timely and quick manner, and saving you a large part of their emotional implications.

4. Focus on a few goals

Yes, we already know that by reading the previous recommendations you have been excited about everything you can improve in your planning for this new year. But before filling your resolution sheet to the end, keep in mind that “he who covers a lot, takes little.”

Be realistic and take one step at a time. A good way to approach you plan to establish a large general objective, which you will aim to achieve by meeting smaller goals that can be addressed simultaneously.

For example, if your main purpose is to save enough to buy your first vehicle, you must define the amount of monthly savings required according to the period in which you plan to make the purchase. It may be necessary that each month, to ensure the required savings quota, you must go to small immediate goals, such as reducing the frequency of expensive outings, eradicating expenses on memberships that you do not take advantage of, working some extra hours, etc. 

5. Identify your Achilles heel

Very often, the cause of financial problems is not a shortage of resources, but poor management. It doesn’t matter how much money you receive, if you don’t know how to distinguish between urgent needs and uncontrolled desires, it will be impossible for your finances to improve.

So, identify those weaknesses or excuses that make you incur expenses that do not correspond to your possibilities.

If you can’t resist the offers, avoid shopping centers. If you satisfy all your children’s whims, start setting limits…

These simple tips will leave you well on your way to financial health. I hope you make them part of your philosophy. If you fail at any of them, don’t be discouraged, sometimes implementing healthy financial habits takes some time. The most important thing is to start taking on the challenge with seriousness and commitment.