Are you making the New Year’s resolution to have more money next year? I’m going to help you set yourself up for success with a series of posts that will help you create a plan that will make it easier for you to follow through on your resolution and actually have more money.
We’re going to break this big goal down into bite-sized pieces and attack it step-by-step in a series of posts called Prepare to have More Money in 2017. This series will include looking back on your 2016 financial year, deciding on your financial priorities, track expenses, setting a budget and implementing your plan.
Prepare to have more money in 2017: Look back on your financial year
This is the first post in the series. We are going to take an honest look back on 2016 and evaluate the good and the well, not so good. This isn’t any easy thing to do, but it is necessary if you want to actually have more money.
Looking back on your financial year
Before we can figure out how to have more money next year, we have to understand what happened this year. We need to know where our money came from and, more importantly, where it went.
It’s important to note that while we’re looking back on 2016 we might find some things we aren’t proud of. You know what I mean. That week that you ate out every day. That trip that cost much more than you anticipated. That huge purchase that you didn’t plan out. Instead of following our instincts to brush past those money mishaps, we need to highlight those areas.
We are going to learn from our money mistakes so we avoid them in the future.
Step 1: Income
Where is your money coming from?
If you only have one income source, this might be as straightforward as looking at your most recent pay stub and finding the amount next to year total-net.
Make sure that you’re looking at your take-home, net income. We want to focus on the money that is passing through our fingers (or debit card), because that is the money that we can directly control.
Finding out exactly where your money is coming from becomes a little more complicated if your family has multiple income streams. You want to consider any source of income that you and/or your spouse bring in. This will include the income from your day jobs and also income from any side-jobs you or your spouse may have taken on.
Is it enough?
Take a look at your total income. If you’re pleased with the number, that’s great. If you find yourself wishing that you’d made more money last year, spend some time brainstorming ways to increase your income in the year to come.
Perhaps you can work a few more overtime hours each week. Or maybe you can explore one or two side-gigs to add an additional income source.
Here are some great resources with ideas for side-jobs:
- 5 Side Hustles That Will Make You Money Immediately By Carly On Purpose
- Make Money at Home: Ideas for an Extra $1,000 Each Month By Breaking the One Percent
- 43 Side Jobs of 20 Mompreneurs Making It Happen! By Ashleigh Blatt
Step 2: Where is your money going?
Now it is time to figure out where your money is going. You may have been surprised to find out how much money you’ve made… because you just don’t know where it all went.
If you don’t know where your money is going, you can’t control it.
Look back at your bank statements (probably via your online banking tools). Look at credit card statements as well. You don’t need to note every single payment, but look for trends.
Here are some examples:
Have you been contributing to your savings account?
Have you been paying off debt?
Is most of it going toward paying off credit cards? Are you charging more than you’re making?
Does all of your money go towards bills? Are your bills higher than you thought they were?
Most credit cards will group your charges by category each month. Take a look at each category and decide if you spending too much on it. Take notice if you are wasting money on finance charges for carrying a balance on your credit cards.
Also, identify any recurring payments on your card. Are you paying for anything you’re not using? (Gym membership anyone?)
If you use cash instead of credit cards, dig up your old receipts. Think back to your big purchases of the year. And don’t forget those small purchases that you make everyday! Are you spending $5 at Dunkin Donuts everyday? That really adds up in the long-run.
Step 3: Reflect
Now that you know how much money you’ve made and where that money has gone, it’s time to take some time to reflect.
- What were your best financial decisions this year?
- What were your biggest money mistakes?
- How much did you add to your savings account?
- How much did you take out of your savings?
- What is the balance on your credit card(s)?
- Have you paid down any of your debt this year?
This is a lot to think about. You may want to give yourself time to ponder. Sleep on it, maybe even over several days.
Don’t skip this step!
It might be tough. Even the most frugal of us make mistakes with our money here and there. But it’s super important that we face those mistakes. We need to learn from our mistakes! And we need to be able to use them as motivation in the future.
We are going to be using this valuable information as we begin to plan for 2017. Over the next few weeks, we are going to use this information from 2016 to prepare to have more money next year!
Make sure that you subscribe here so you don’t miss the next post in this series: How to track expenses. I may also be sending out some financial planning goodies, so you’re going to want to be on my email list!