It still feels like summer (and I’m not ready for that to end), but I’m already thinking about the New Year.
Here at Tiller, we typically see a surge of new customers at the beginning of the year as people set money goals and resolve to get their finances in order.
But in many ways, the autumn is a better time to audit your finances and commit to new money habits that bring you closer to your goals. Here’s why.
1 – The New Year isn’t necessarily the best time to set financial goals
Everything is skewed when you sit down in January to set financial goals.
Your last six weeks of spending are warped by the holidays. You might be feeling more stress or guilt around money than usual. And because the entire world is sharing their resolutions, you might feel pressure to set goals that are unrealistic.
But in September, no one’s talking about resolutions – for fitness, finances, or anything else. (Well, I am, but that’s beside the point.) September is a great, low-stress time to consider your financial goals for the year ahead – and beyond.
2 – You still have time to achieve your 2021 goals
Speaking of goals, how are you doing with the ones you set for 2021? (You know, another year of global pandemic and related economic fallout?)
Despite the choppy year so far, right now is an ideal time to audit your past months of financial trends:
- How are your money fundamentals? Emergency savings, life insurance, debt load, credit score, etc?
- What are some expenses that crept up over the year that you could cut?
- Do you need to get in touch with your financial planner or rebalance any investments?
- Are there any finances you can automate?
- Is your income where it needs to be? Is it time to think about asking for a raise, looking for a new job, or pursuing a side hustle?
- How is your net worth today, and how has it changed over time?
It’s also useful to review your progress toward the financial goals you set last year:
- What were your goals, why were they important, and are they still relevant?
- What’s working, what isn’t and why?
- How can you use the next three months to end the year where you want to be
Have suggestions for what to include in a personal finance audit? Share it in this thread with the Tiller Community!
3 – It takes a long time to create beneficial financial habits – so start taking tiny steps today
As we all know from experience, it can be really hard to make new habits. These habits might include spending less, closely following a budget, or tracking spending.
Many people try to kickstart new habits with new year resolutions. Unfortunately, most of these resolutions fade by February.
However, if you start working on those habits now with very small steps, you have time to gradually build a new habit. By the time the new year rolls around, you’ll already have momentum toward your long-term goals.
4 – Gain awareness of your spending now to achieve your goals in 2022
Tracking spending is one of the most powerful ways to maintain awareness of your financial situation. And as we’ve noted before, financial awareness equals financial confidence, regardless of income, debt, and net worth.
Close, detailed awareness of your spending will transform your relationship with money. It will help you see where your money goes. And it will trigger better spending and saving habits.
Most financial experts say you should intentionally track your spending for one to three months. As Douglas A. Boneparth recently told the New York Times, “It’s very hard to make changes unless you actually know what you’re spending money on.”
Typically, you want to track your spending for about three months to get a good idea of where your money is going. Not every month will be the same, so it will be important to budget for expenses that come up sporadically, like auto insurance renewals or water and sewage bills. – 5 Ways to Easily Track Your Expenses and Save Money
We’ve heard from hundreds of Tiller customers that the simple act of reviewing their transactions has helped them spend less, save more, and better allocate their money.
Also, until you know what you actually spend each month, you can’t make a realistic budget. A budget is the first step to paying off debt and increasing savings for most people.
“The people who feel the best about their financial situation … are people who are fully aware of what their financial situation is.” – Maggie Germano