This past year came with more than its fair share of drama and challenges. It’s time to take a look back and reflect on your financial goals.
For many of us, this past year might have seemed like a write-off financially. Stuck at home, long days of internet shopping for things we don’t need, and a lower income than normal. Or maybe you had a brilliant year, using lockdown to do some home renovations, saving more since you weren’t going out, and you were productive.
Either way, it’s time to do a bit of financial self-reflection. Just like some people make New Year’s resolutions, it’s a great opportunity to see what went right—or wrong—in your finances, and how to make next year a better one.
What is financial self-reflection?
As you look back over the last year, you acknowledge the good, the bad, and the ugly.
It’s not about punishing yourself for the bad things that happened, but about setting yourself up for success next year. Because when you look back, you can identify what you did that was great, and want to continue doing, and what wasn’t as great, and plan how to avoid doing it again.
Research shows us that people who reflect on their habits help set intentions and achieve their goals. In fact, this technique helps people 140% more than other techniques.
Step one: Ask yourself the difficult questions
What financial decision are you most proud of?
Start off with a bit of positivity. Did you save more than you did the previous year? Did you resist an impulse purchase? Did you stick to your budget all year?
Pat yourself on the back—none of this is easy, and you did well.
If you could do one thing differently, what would it have been?
No one is perfect, and we all make errors in judgement. What was one thing you’d change if you could? And, looking forward to next year, can you do anything to ensure the same thing won’t happen again?
What’s one thing you can do today to improve your finances?
Is it time to sit down and write down your budget? Do you really need to ask your boss for that well-overdue raise? Do you need to ring around and find a more economical insurance package?
When’s your next big money milestone?
Everyone has financial milestones and targets. It could be getting married, going on holiday, or paying off that credit card debt. What can you do more to plan for these?
Think about a situation where you successfully changed a bad habit to a good one.
Maybe, in the past, you’ve eaten lunch at a café every day, but this year, you were only doing it once or twice a week. Or perhaps you had actually set a direct debit so your savings disappeared from your bank account before you could spend it.
Did money stop you from doing what you wanted to?
Was there anything you wanted or any goals that you had planned that you couldn’t achieve due to money?
Step two: What did you learn from this?
Once you’ve thought about these questions, write down any tactics you used that you could use in future. An example could be that your goal was to not buy your lunch every day, and you were successful. Why? Did a colleague encourage you to eat your packed lunch every day? Did your partner make enough dinner so there were leftovers the next day?
What did you, and the people around you do, to help reach your financial goals?
Step three: Make your plans for the future
In the example about packing lunches, you learned that you need to be accountable to someone else. So, in terms of finances, maybe you could get a financial adviser to talk to every month. Whatever your learnings were from your successes (and failures), make a plan to maximise your chance of success in future.
Spend some time now and set yourself up for a great year for finances. If you still feel a bit lost, contact Sam Kodi and his team to get started (or, to help you be accountable, if that’s what you need).