If you want to give yourself something useful this year for Christmas, you might consider the gift of better finances. As the year draws to a close, it’s a perfect time to think about what you can do to improve your finances in the coming year. An improving money situation is a gift that keeps on giving, and one that you will never regret giving yourself. However, you will have to take the time to prepare:
Earn More than You Spend
This is the most basic of financial rules. You should have more money coming in each month than goes out. You can accomplish this by cutting some of your expenses so that you are spending less of your money, or you can do this by finding ways to increase your income — earning more. In either case, the important thing is to manage your cash flow so that you have money left over at the end of the month. (Or no money if you are working off a zero based budget, where every dollar is accounted for.)
Pay Down Debt
Make it a point to pay down debt in the new year. This is especially important if you are having a credit card Christmas this year. There are few things in your financial life as draining to your wealth as paying interest on a credit card balance. Give yourself the gift of a debt repayment plan this Christmas, and then stick with it in coming year. You will be glad as you watch your debt level fall, and as you move a step closer to financial freedom.
Save for Emergencies
Emergencies are stressful enough without having to worry about how you will pay for it. Start an emergency fund, and add to it regularly. Free up some room in your budget by getting rid of some of your less important expenses, and make it a point to build up your emergency fund. I know I was grateful for my emergency fund this week when six inches of water invaded my home. While Christmas has been a bit dampened this year, it could have been anything but merry if we were trying to figure out how in the world we were going to pay for the unexpected expense. The value of the gift of financial breathing room is hard to beat.
Set Your Financial Priorities
You can create a better financial plan when you set your financial priorities and stick with them. Knowing what is important to you — especially in terms of finances — can provide you with a guide for your future spending. Take some time to evaluate your financial goals, and what you want your money to accomplish for you. Then you can begin to make a plan that allows you to prepare for the future, while finding some enjoyment in life today. You will never meet your retirement goals, your vacation goals, your college goals or any other goals if you don’t work out a plan to achieve them. Set your priorities now so that you can create a plan that will lead to financial freedom later.
Wishing you a Merry Christmas, and best wishes for a prosperous New Year!