Apart from the obvious ones, such as saving more, updating your will, and ensuring your loved ones are protected if you were to die suddenly, here are seven practical ways to improve your financial (and overall) wellbeing and reduce money worries in the year ahead. <\/p>\n
\u200b1. Know where your money is going<\/p>\n
It takes considerable effort to stick faithfully to a monthly budget and track expenditure down to the nearest cent. I think more people profess to do this than are actually doing it. If you\u2019re not that disciplined with your money, there\u2019s a base level of control you need to achieve: know to a fair degree of certainty what you\u2019re spending in the broad expense categories \u2013 for example, groceries, accommodation, transportation, insurance, services, entertainment, and savings. It\u2019s also important to closely monitor your bank statements for unauthorised debits \u2013 these amounts, which may be small enough to escape your attention, tend to sneak in and take up permanent residence in your finances.<\/p>\n
\u200b2. Reduce your debt pile<\/p>\n
Total up your liabilities \u2013 what you owe on everything from your car to your home to your credit cards. Make a note of that figure and resolve to bring it down by the end of the year. You will do it naturally if you carry on making your repayments and avoid taking on more debt, but you can speed up the process by ploughing more into repayments. On your total debt pile, you may be paying an average interest of 15% or more per year, so think of reducing it as a form of tax-free saving at a great interest rate.<\/p>\n
\u200b3. Know the replacement value of your possessions<\/p>\n
Now look at what you own. Have you recently made an inventory of your home contents? Your possessions are probably worth more than you realise, and replacing them should your home burn to the ground could cost a fortune. This is what your insurance needs to cover, so make sure that the total sum insured, which should reflect the replacement value of your used possessions with new ones, is accurate. Remember that if you are under-insured, the average rule applies, which means that even on small claims, the payout will be proportionately reduced. Insurers aren\u2019t keen to do it, but you can specify items that would be impractical and too costly to replace, such as a book collection, to fall outside your cover.<\/p>\n
\u200b4. Declutter<\/p>\n
In making your inventory, you are likely to come across many things that you no longer use or need. Clothes, books, kitchenware, electronic gadgets, and accessories lying dormant in a drawer \u2026 I could go on. Getting rid of them not only ensures that your insurance policy covers only the items you need covered, but also enables someone else to get some use out of them. And instead of trying to flog them online or offload them at an auction house, why not be a good citizen and donate them to a charity? <\/p>\n
\u200b5. Forget about the Joneses<\/p>\n
Envy is a wasted emotion that drains our sense of well-being. One of the surest ways to reduce financial stress is to stop comparing what you have with what others have. Don\u2019t make the apparent wealth of others a yardstick for your own achievements \u2013 their financial position may be a lot worse than you think. The guy in the Ferrari on the road in front of you \u00a0\u2013 would you like to be him? Apart from the car, you don\u2019t know anything about him. His company may be in liquidation, his wife may have deserted him, and his eye-catching means of transport may be about to be impounded by the taxman.<\/p>\n
\u200b<\/p>\n
6. Don\u2019t underestimate non-material wealth<\/p>\n
Financial wealth is one component of wellbeing \u2013 don\u2019t neglect the others. In his bestselling book “The 5 Types of Wealth: A Transformative Guide to Design Your Dream Life,\u201d American writer Sahil Bloom reminds us where our priorities should lie. Apart from our financial assets, we have: <\/p>\n
\u2022 Time wealth: \u201cAchieve control over your time \u2013 how you spend it, where you spend it, and whom you spend it with.\u201d<\/p>\n
\u2022 Social wealth: \u201cProximity to people you love is worth more than any job will ever pay you.\u201d \u00a0<\/p>\n
\u2022 Mental wealth: Remain curious, for it is \u201cthrough curiosity that you \u2026 unlock new insights and achieve lifelong growth\u201d.<\/p>\n
\u2022 Physical wealth: Invest in your body through \u201cregular movement, proper nutrition, and thoughtful recovery\u201d.<\/p>\n
\u200b<\/p>\n
7. Be wary of doomsayers<\/p>\n
Prophets of doom are invading the internet. Question everything. The historian and author Yuval Noah Harari, in his book \u201c21 Lessons for the 21st Century\u201d, says it\u2019s better to admit being bewildered than yielding to panic. \u201cSwitch from panic mode to bewilderment. Panic is a form of hubris. It comes from the smug feeling that I know exactly where the world is heading \u2013 down. Bewilderment is more humble, and therefore more clear-sighted. If you feel like running down the street crying, \u2018The apocalypse is upon us!\u2019, try telling yourself, \u2018No, it\u2019s not that. Truth is, I just don\u2019t understand what\u2019s going on in the world.\u2019\u201d<\/p>\n
* Hesse is the former editor of Personal Finance.<\/p>\n
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