A three-week plan to fix your finances before New Year

New Years are all about new resolutions. And the most popular ones are on losing weight and managing money well. And it is again that time of the year when we decide what resolutions to take on 1 January. But hold, what about last New Year’s resolutions? Have you dropped them half way and are you planning to migrate them to the coming New Year? But, all is not lost yet. We still have around three weeks left in the current financial year, and no we are not talking about going on a crash-diet to met the weight loss target, but simply a three-weeks plan to get your money matters in order. To know more, read on.

Week 1: Know where you stand

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First week starting today, know where you stand financially. This means gather all your financial paper work in a single place – documents related to your assets and liabilities. This include various loans, your credit card dues, unsecured loans and even your utility bills. Gathering these won’t be too difficult if you are already organised. But, remember that many financial account statements no longer come in paper format. Have all your digital financial documents in one folder, as well if possible. Now we agree that you might think, you don’t really need an entire week to do this task, but you’d be surprised to know how many have no idea where their bank passbook and cheque books lie.

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Once all the paperwork is in place, know where you stand financially. Know the exact amount you owe as debt and the assets you have gathered over the years. Once this is done comes the second step.

Week 2: Automate as much as possible and track how your spend

The next step is to track your spending pattern. Of course, you’d be surprised to know how much you really spend compared with what you thought you do. Tracking your expenses should ideally be done for a longer time, but a week is also good enough if you haven’t done so before, at least it’s a start. Once you’ve identified your spending pattern, you would know exactly the amount of fixed expenses you have every month, like rent, EMI, groceries and utility bills etc, and the variable expenses like lifestyle expenses, movies, outings and the like. Then there are “laziness expenses”, these are fees and fines you land up paying since you miss paying bills as per due date. Not all have laziness expenses, especially if you have a dogsbody running around for you or if you’ve used technology for your advantage. If such expenses are high, use auto-pay facility on utility bills. Do track the bills though. Also set reminders on your cell about up coming due dates. As far as possible, auto-pay all bills, that way you won’t need to pay a late payment fee ever.

Week 3: Make a mini budget and practice

By this time, you will have a fair idea about your finances. It’s time to look into making a budget that works. See how to make budget here. In fact, we recommend you make two budgets one for the next month and a mini budget for the last week of December. Remember, by this time, it would be the last week of the year and the festival mood would have already set in. In a tempting time like this if you are able to stick to a mini-budget, you have won half the battle. In fact, use the last week of the year to strengthen the financial discipline muscle, but sticking to the mini-budgets you make. They say nothing succeeds like success. And if you are able to stick to a mini budget, you will be a lot more confident to enter the New Year with a strong financial discipline muscle.

Don’t wait for the New Year to fix your finances. Yes, you can’t really fix all your finances in three week’s time, but it’s surely a start.