Welcome to November, the penultimate month of the year.

Phew!

2020 seems to going so fast, and you will agree with me that it is a good thing given how eventful the year has been.

As we count down to 2021, we need to ensure that we align our financial goals and targets with our expectations.

To do this, we need to create time to deliberately take stock of how the goals we set for 2020 have fared against current position (this is one exercise where we can’t afford to play the ostrich).

In carrying out the exercise, we will discover that there are areas where we would have done well, some others where we would have done fairly well, and others where we, clearly, would need to improve.

It is always advisable to do this exercise before the New Year in order to have clarity about your financial goals for that year (in that case, 2021).

Below are some of the steps to take while reviewing the current year, and planning for the new year:

  • Analyze what you have spent so far: This means doing a review of your bank statement(s), credit cards (for those who have) and asking some questions such as
    • How much was spent on necessities, wants and charity amongst others?
    • Which of these expenses could have been avoided?
    • What did I overspend or underspend on?
    • What are the expenses I really can’t remember making?
    • How much did I save compared to my expenditure?
    • How much of my savings was eventually invested?

For those who do this exercise monthly, you clearly have an advantage over those who are yet to do this. Do remember that the review is not an end in itself but should lead to concrete action steps being taken.

This is important as it helps analyze your spending patterns and gives clarity to your budgeting figures going forward.

For example, you may discover you have spent more than you initially budgeted on data or fuel or even eating out. This should be analyzed further and may mean reducing the number of times you eat out for example or reviewing the budgeted figure upwards (if you can afford to do so).

  • Set clear but flexible goals for 2021: Beforethis can be done, you need to objectively review the financial goals or targets you had set for 2020.

If you were able to meet them, well done! If not, 2021 provides you with another chance to meet and exceed it.

In setting your goals, you have to be precise either in terms of values or action steps or both.

For example, I want to invest One Million Naira in the stock market by December 2020 is a clear goal. Flexibility means if I was able to only invest 800,000 naira; I will carry the balance forward and add to 2021’s budgeted figure.

For 2021, you may want to not only be specific about the values but also about the investment vehicles. Do not forget to include timelines in order to track performance.

  • Aspire for more: In many organizations, budgeting exercises are preceded by lectures or breakout sessions about expectations and outlook for the coming year.

For those who do not have this opportunity, I will suggest you look for materials or even register for any of such lectures open to the public.

This helps you plan and budget accordingly and also inspires you to do better. You also may learn ways or strategies for better navigating your finances in the New Year.

For example, for those of us in Nigeria, your 2021 budgeting should not ignore the steadily growing inflation, reducing interest rates and possibility of further devaluation of the Naira.

Whilst this definitely isn’t the news most (if not all) investors want to read about; it should inspire you to look for ways of improving your finances or maximizing your investments in the face of these headwinds. 

Personally, I always look forward to reading the annual publications by The Economist and Bloomberg Businessweek magazines respectively analyzing the incoming year.

  • Document your plans: According to an old Chinese proverb “the faintest ink is more powerful than the strongest memory”.

Writing down your financial (and any other) goals helps you internalize, quantify and track them.

It also ensure that there is no ambiguity in your plans for the year. Goals that are written tend to serve as motivation and act as reminders to keep us on track.

Please remember as you set out your money goals for 2021 that the existence of a functional budget is a necessity. This is because your budget will help guide your goal setting exercises specifically with respect to targeted values.

Kindly remember that there is still no cure for the corona virus and that prevention is always the better option.

Please continue to take personal responsibility for ensuring that Nigeria does not experience a second wave of COVID 19.

Keep washing your hands, maintaining social distancing and wearing your face masks in public.  

Till next week, do have a wonderful week ahead and a rewarding November.

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