The turn of a New Year brings about a time for reflection, a time to look back on the achievements and failures of the past year. It is a time to learn from the past, analyze the present, and dream about the future. Setting goals and making an appropriate plan is one of the easiest ways to control your finances and reduce stress. Use these 5D’s to identify your big and small financial goals and stay focused on achieving them in 2021.
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Do an Annual Review
The past year would always have teachable lessons, regardless of how painful or regrettable, you can probably learn lessons that will make next year better. But you can never know exactly how the year went until you’ve asked yourself critical questions like; what did I accomplish last year that I’m most proud of? What, in the previous year, worked out for my finances? What business product or service acquired me the most profit? What about last year disappoints me the most? Where are my best opportunities for financial growth? And finally what did last year teach me?
Make use of an accountant or accounting software to run financial reports, such as an income statement (also known as a profit and loss) for last year. It shows your revenue and expenses for a given period. Review what you earned and spent, and look for ways to increase your profit.
Determine Your Current Finances
After much examination and reflection of the previous year, turn your attention to your current financial situation. Your current financial health can be determined by running a balance sheet or updating a personal financial statement. Your balance sheet shows what your business owns, owes and the owner’s equity. Likewise, a personal financial statement shows your assets and liabilities and calculates your net worth.
Dream About Your Future
For financial goals to stick, they need to be meaningful to you. Dedicate time to think about how you want your business to evolve. Give thoughtful consideration of what you want your life to be like in the near future. What business and personal accomplishments would you be proud to achieve between now and then?
Everyone needs a source of motivation, You might choose a word, slogan, or theme for the year to rally around and support your financial goals. The power of affirmations works wonders. For instance, 2021 could be “The Year of Reinvention,” “The Year of Emergency Savings” or “The Year of Outsourcing.”
Design Your Set Goals into The Budget
Once you’ve reviewed the past, analyzed where you are now and fully considered what you want to accomplish, it’s time to incorporate your goals into your financial plan or budget. If you don’t shape your spending plan to account for your business or personal financial goals, they aren’t likely to happen. Once you have a perfect understanding of your cash flow, you may need to alter it to meet your goals. Most accounting programs can link up with your financial accounts so you can budget, create reports, pay bills and perform many advanced functions.
Don’t Forget Your Goals
After the shine of a new year wears off, it’s easy to forget your financial goals. One way to ensure you religiously stick to them is through the use of automation. Here are some ways you might automate your financial goals in 2021:
Use digital tools, such as automatic email sequences, to connect with existing and potential customers and gain market share.
Set up automatic contributions to a retirement account for the self employed— such as an IRA, SEP-IRA or solo 401(k) — before you have the chance to spend them.
Create recurring transfers from your business or personal checking into a savings account to build your cash cushion.
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Set up recurring payments to send extra toward debt that you want to get rid of faster.
Having a realistic and feasible plan to turn your business and personal dreams into realities will go a long way toward helping you achieve success no matter what’s happening in the world.
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