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If you review your finances now, you can end the year on a positive financial note.
Some consumers kickstart positive changes for the year ahead in January, while others choose to make resolutions at other times. Whatever you do, understanding how and why we stumble during the improvement of our financial behaviour gives us a better shot at success the next time.
During times of economic uncertainty, staying on top of personal finances becomes more critical than ever.
Reviewing your finances now is a proactive approach to manage your goals rather than waiting until the end of the year to figure out what went wrong.
“Examining the state of the economy and its potential impact on personal finances, you can proactively devise coping mechanisms to weather financial storms. It is critical for consumers to be persistent in the pursuit of improving their overall well-being and this includes their mental, emotional and financial wellbeing. There is a driving need for survival through self-improvement,” Claire Klassen, consumer financial education specialist at Momentum Metropolitan, says.
She says it is a good idea to embrace a growth mindset. “Financial struggles require a growth mindset where you reflect on your financial journey and highlight achievements and areas for improvement. If you do not achieve what you set out to do, for example not using your credit card or making another loan after settling the previous one, forgive yourself and try again.”
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Tell yourself that you are not giving up and that you will live to fight another day. Listening to podcasts on your favourite social media platform that centre around self-development and forming good financial habits is a great way to start the process of embracing a growth mindset.
“This allows people to adapt to changing economic conditions and develop proactive money management habits. By seeking opportunities for financial education and empowerment, you can thrive despite economic challenges,” she adds.
The next step would be to evaluate your spending habits and budgets. “In a challenging economic climate, analysing your spending habits is crucial for maintaining your financial resilience. Conducting a mid-year review of your budget allows you to do a realistic evaluation of your expenses and income sources.”
Klassen says if you identify areas where you can cut expenses and curtail discretionary spending, you can redirect funds to essential priorities, such as savings, emergency funds, or debt repayment. This evaluation encourages financial discipline, which is vital for navigating the unpredictable economic landscape.
On a practical level, this means printing out a bank statement for the past three months and going through the deductions noting any deductions that are wasteful. For example, having more than one online streaming service in addition to a paid television subscription may not be the best use of your money. Choose one that appeals to you most and cancel the others.
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Another step is to identify opportunities for savings. As the economy struggles, every cent you save holds immense value and this exercise can help you to identify potential savings opportunities. “By scrutinising utility bills, subscription services and other recurring expenses, you can uncover areas where you can reduce costs. In addition, this assessment facilitates comparison shopping and seeking out better deals and discounts that can lead to substantial savings,” Klassen says.
The next step is to build and maintain an emergency fund. In the face of economic hardship, an emergency fund acts as a crucial safety net. A mid-year financial check-in offers an opportunity for you to assess your existing emergency funds and strategise for their growth.
“By consistently contributing to an emergency fund, you can safeguard yourself against unforeseen expenses or financial setbacks in an unstable economy. An adequate emergency fund buffers you against economic uncertainties, providing peace of mind in turbulent times,” she adds.
In a struggling economy, a mid-year financial check-in emerges as a beacon of financial empowerment and resilience that will lead to financial success. Embracing this powerful tool allows you to navigate financial turbulence with confidence and strengthen your financial footing during economic uncertainties.
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