As the new year progresses and the holiday season fades, it’s a great time to reassess your finances. With the demands of everyday life, it’s easy to forget about long-term financial goals, but now is the perfect time to focus on achieving them. Whether you want to eliminate debt, save for a future goal, or simply regain control of your financial health, here are some essential steps for resetting your financial situation in 2024.

1. Assess Your Current Financial Situation

The first step toward financial reset is taking a comprehensive look at where you stand financially. Begin by reviewing all your assets and liabilities. This includes checking your savings accounts, retirement funds, TFSAs, and the value of your property if you own a home. Then, list out any debts you have, such as credit cards, loans, and mortgages.

Subtract your debts from your total assets to determine your net worth. This snapshot will serve as a baseline to track your progress throughout the year. Be sure to revisit these numbers in six months to gauge how much you’ve paid off and how much your savings have grown. Keeping track of these details annually will help you stay focused on your financial goals.

2. Set Clear Financial Goals

Once you understand your financial standing, the next step is to set SMART goals. These goals should be Specific, Measurable, Achievable, Realistic, and Time-bound. Instead of vague objectives like “I want to get out of debt,” set a more concrete goal such as, “I aim to pay off $1,200 in credit card debt by June 30, 2024, by making monthly payments of $200 and avoiding unnecessary spending.”

Setting specific, detailed goals not only helps you stay on track but also gives you a sense of accomplishment when you meet them. Aim to set one or two short-term goals to achieve within the year and one long-term goal that will take several years to reach. For example, a short-term goal might be saving for a vacation, while a long-term goal could focus on retirement planning.

3. Plan for the Year Ahead

To make your financial goals a reality, it’s important to plan for the unexpected expenses that may arise during the year. Often, we overlook one-time costs that can derail our financial plans, such as seasonal expenses or home maintenance.

Start by estimating your total income for the year, including salary, tax refunds, and any bonuses. Then, list all your debts, noting their interest rates and due dates. Make sure to also account for both fixed expenses (like rent or mortgage payments) and discretionary spending (such as entertainment and dining out). Don’t forget to plan for one-time costs, such as birthdays, weddings, or holidays.

By anticipating these expenses, you can avoid financial anxiety and ensure you’re prepared for the year ahead. Remember, most of these costs aren’t truly “unknown” if you take the time to review past spending and prepare accordingly.

4. Create a Budget

Having a solid budget is essential for staying on top of your financial goals. A good budget balances your income with your expenses, helping you identify areas where you can cut back and save. Your budget should account for debt repayments and savings alongside your regular monthly expenses.

While it’s tempting to create an extremely tight budget, this often leads to burnout. Instead, give yourself room for occasional treats or splurges without compromising your overall financial goals. If your budget doesn’t balance, look at reducing some non-essential expenses—perhaps by canceling subscriptions you don’t use or carpooling instead of driving.

If you find yourself struggling to create a budget, consider seeking guidance from a credit counselor. They can help you design a budget tailored to your needs, ensuring it’s realistic and sustainable.

5. Monitor Your Progress and Make Adjustments

Once you’ve set up your goals and budget, it’s crucial to regularly check in on your progress. Schedule monthly or quarterly reviews to track your spending, assess how well you’re sticking to your budget, and make adjustments if necessary.

During these check-ins, take note of any areas where you might be overspending and adjust accordingly. Also, review your debt repayment plan and savings progress to ensure you’re staying on track to meet your goals. Visualize your future self and the lifestyle you want to create. This can serve as motivation to keep working toward your financial objectives.

One useful tip is to set up automatic payments for debts and savings so you’re consistently contributing to your financial goals. Regularly reviewing your progress will help keep you focused and give you the opportunity to make adjustments throughout the year.

Bonus Tip: Check Your Credit Report

Another important financial task to complete early in the year is checking your credit report. You can request a free report from agencies like Equifax and TransUnion. Regularly reviewing your credit report allows you to catch any errors or signs of fraud, which could impact your financial health.

If you notice any discrepancies or missed payments, take steps to correct them. Improving your credit score should be part of your financial reset, as it will benefit you when applying for loans, mortgages, or even renting an apartment.

Conclusion

Resetting your finances is a journey that requires planning, discipline, and regular monitoring. By assessing your financial situation, setting clear goals, preparing for the unexpected, and sticking to a budget, you’ll be well on your way to financial success in 2024. Start small, stay consistent, and keep adjusting as necessary, and you’ll be amazed at how much progress you can make by the end of the year.