How Your Next Birthday Can Help You Find a Fresh Financial Perspective
Birthdays and how we react to them can differ greatly: as children, we look forward to them, and as adults, we may possibly dread them. Whichever camp you’re in though, there’s no denying that they’re a symbol of change and the passage of time. Just like New Year’s Day is a time when most people make resolutions to improve their lives in the coming year, a birthday can be an opportunity to make positive life changes.
One of the more positive life changes you can make is to use your birthday as a springboard to get a fresh perspective on your finances. Even for those of us who like to think of ourselves as financially savvy, the truth is that our knowledge of our overall fiscal health is almost always a little fuzzy around the edges: exactly how much do I make each every pay period? Why does my income seem different from month to month? How much will I have in savings after paying off a credit card? Why do I find myself looking for a title loan near me over and over again?
It’s time to answer those questions and give yourself a solid, concrete understanding of your finances and where you want them to be moving forward.
The best way to understand where you are financially is to track your income and expenses for the last year if not two. There are plenty of apps that can help you navigate this seemingly difficult task. Mint, for example, is the most popular financial app on the market and it will automatically upload all your credit card and debit purchases, organize them into categories and display the results in either graphs or pie charts. It’s a handy way of taking most of the grunt work out of going through your bank statements and manually logging and organizing your expenses.
Once you have all that data gathered together, it’s time to look at what it means: what are the trends and patterns that emerge? Do you seem to spend more during certain months and less during others? Do you have unexplained spikes in certain categories of expenses? Making sense out of the madness of your finances is what this process is all about, and something you can only do once you have all of the data in hand.
There’s a saying that you can’t win a battle until you’ve defined what “winning” actually means. This applies as much to your finances as it does to an actual battle. After you fully understand where your finances stand now, it’s time to set goals and lay out clear objectives for the future. Do you want to create an emergency savings fund? Invest more in your retirement? Finance a new car? After you have a comprehensive understanding of your financial situation you can create a plan of what you need to do and where you need to put your money to make your dreams a reality.
Too often in life we fall into a rut and stop paying attention to certain important details. Don’t let this happen with your finances. For your next birthday, give yourself the gift of looking towards the future and begin planning for it today.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.