As 2016 kicks the bucket, it is time to tie up all your loose financial ends. The year end is the best time to do some financial housekeeping. After all, you are stepping into a new year and you wish to start it on a clean slate, right? Besides, the way you end a year has a direct impact on how you start the new one. So, it would be wise to improve your finances and end 2016 on a financial upswing.
Here are a few tips if you’re looking to end the year on a financially strong note:
- Declutter Your Financial Life
Unused cards and bank accounts add a lot of financial clutter in your life. How about cleaning up this financial mess before the new year? You can start by making a list of your bank accounts, Credit Cards, Debit Cards, investments, etc. Having an organised inventory will help you manage your finances better.
The next step is to get rid of the unwanted stuff – unused bank accounts, idle investments, and unused cards. Take some time and close all the bank accounts that you don’t use anymore. You may be aware that closing Credit Card accounts can harm your Credit Score. So, do not close all your cards at once.
- Clear Your Debts
It’s better not to carry all of your 2016’s debts into the new year. So, clear at least some of your outstanding debts before you step into 2017. Firstly, be clear about how much you owe – loans, Credit Cards, and other outstanding debts. Once you have a clear picture of this, you need to start prioritising your debts and clear a few of the important ones before the year ends. For example, you can clear half of your outstanding Credit Card dues or pay off your friend from whom you borrowed money a few months ago. The point we’re trying to make here is that one less debt into the new year means more money at your disposal.
Additional Reading: The Stack Method: An Effective And Speedy Way To Clear Your Debts
- Examine Your Finances
Before you end the year and step into a new one, it is necessary for you to figure out where you stand financially. So, review your entire year’s finances! This thorough review will help you identify cracks in your finances so you can work towards improving them. Besides, if you have a thorough idea about your spending habits and unwanted expenses, you’ll be able to set a better budget for the new year as compared to the one you currently follow.
- Check Your Credit Report
We all know that it’s important to check our Credit Reports at least annually. And the year end is the best time to check your credit history. Checking your report will help to make sure that your credit history is accurate and there are no errors in it. Besides this, you’ll also get to know how good your Credit Score is. If it needs improvement, you can set it as a financial goal for the new year.
Additional Reading: 10 Myths About Credit Score And Credit Report
- Set Your Financial Goals For The New Year
It is necessary to set your financial goals for the new year before it starts. This will give you a clear idea about how to manage your finances in the new year. Your financial goal can be anything – buying a car, starting an emergency fund, clearing all your debts, investing in Mutual Funds, etc.
You can also take action on any one of the goals before the year ends too. For example, if you want to clear your Credit Card outstanding balance as soon as possible, you could consider making an extra payment this month. Or if you have been putting off setting up an emergency fund, you can open one before the year ends. Sounds like a good plan, right?
Bonus Read: 12 Financial Lessons From 2016
Oh, don’t forget to create a new budget before you step into the new year. All the best! Do let us know what you’re doing to end the year on a financially high note.