According to a study done by WalletHub, approximately 100 million people set a money resolution as their New Year’s goal each year. If you plan to be one of the many people who wants to dominate their finances over the next 12 months, keep on reading to learn how to achieve your goal.
Entering a New Year is hands down the most popular time to set goals.
Why is that?
Well, there’s something about entering a New Year that make people motivated to have a ‘fresh start’ with achieving their biggest, and sometimes extremely difficult goals.
unfortunately, many people abandon their resolutions by February. Don’t be one of those people!
If your goal is money related, make sure to set yourself up for success by not overreaching and by staying consistent and committed.
It’s also important to remember that money resolutions don’t need to start at the beginning of the New Year. Anytime is a good time to decide to take financial control over your future.
Here are 6 money resolutions to help get your finances in order.
1. Create a Monthly Budget and STICK TO IT
If you’re saving for a big purchase, paying down debt, or if you’re simply wanting to break the cycle of living paycheck to paycheck, it’s time to create a monthly budget to monitor your spending. Creating a monthly budget can be a bit challenging at first if you’ve never done it.
An easy way to get started is to list all your bills and expenses that you must pay each month. This list will include rent/mortgage, phone bill, car payment, groceries, etc. Next, list everything you typically purchase that is a luxury such as eating out, entertainment, shopping, etc.
Now that you have your lists, estimate how much money you spend per list. Your bills are rather consistent so that number should be easy to come up with. The real budgeting is for the second list of luxury expenses.
If you’ve never limited yourself before, now is the time. Set a dollar amount that you are willing to spend each month and stick to it. That means if you spend your limit in only half the month, it’s time to reevaluate your spending habits.
It’s important to be strict with yourself in the beginning so that you can learn control and discipline. Once you get the hang of it, you’ll see that having a budget is helpful in the long run for spending on things that matter most.
For step-by-step instructions creating a budget that works + a free budget template, check out A 7 Step Guide to Create an Easy Budget to Follow
2. Tackle Debt, like ALL of it
There is this common idea that that some debt is good debt such as student loans.
While that is true that not all debt is ‘bad’, debt is still debt.
Currently, it’s estimated that the average person spends upwards of $8,000 a year in interest alone. If you’re anything like me, you don’t like to pay money when you don’t have to, which is why the idea of living a debt free life is so amazing.
The first step in tackling debt is figuring out exactly how much you owe down to the very last cent. Once you know how much you owe across the board, you can budget your spending and pay more towards your monthly payments.
Something I started doing a while ago, which has also worked for many people, is automated payments. All my bills are set to auto-pay so that I never miss a payment. That last thing you want is to have more interest tacked on to your debts or to be sent to collections for untimely payments.
I do want to acknowledge that everyone’s financial situation is different and it may be difficult to put more money towards paying off debt. That’s why it’s important to sit down and figure out a financial plan that works for you and your family while also obtaining a financially stable life.
3. Automatic Savings Straight into Your Account
By now you’ve probably heard about how important it is to have a savings account (one that you don’t touch, preferably). While most of us have a savings account, many people are not putting money into it frequent enough.
The fact is, money should be deposited into a savings account everytime you get paid. That’s the best and most structured way to save. However, if you’d rather make a deposit once a month, most banks have an automatic transfer option from a checkings to a savings account.
After you’ve created your monthly budget, decide how much money you want deposited into your savings and ask your bank to make automatic transfers every month. This no-brainer method will grow your account in no time.
4. Keep Up With Online Banking
This is a simple money resolution because all it requires is that you keep track of your spending by checking your online banking statements frequently.
One of the great aspects of technology is not having to balance a checkbook by hand. When I was in high school, my checkbook rarely came out balanced. It was frustrating and faulty and many times I just gave up.
Enter online banking.
The beauty of online banking is that it tracks every single purchase and includes a description of the location, date, and amount. It also keeps all your banking accounts in one place, allows you to pay off credit cards with the click of a button, and it’s clean and easy.
With online banking, you can track all your purchases for the month (and many months previous) so you can know where your spending is high or unnecessary.
For example, are you eating out too much? Do you pay for subscriptions you don’t use? Are you waiting for a payment you haven’t received?
Online banking can help you with all of that as long as you check on it every now and again. I personally assess my finances twice a month through online banking and it’s been extremely useful and accurate.
5. Plan to Reduce Spending
Now that you have a monthly budget and online banking, you can see every dollar you’ve spent. Since part of the goal is to save more, the other part needs to be to spend less.
If you aren’t sure what to start reducing your spending, here is a list of common areas spending tends to be high for the average person:
- Eating out
- Credit card interests
- Streaming services/ TV
By now you probably have a good idea of where you should reduce spending in order to really see success. While this step is one of the hardest due to the discipline it requires, once you get into the habit of knowing what not to purchase, your finances have a chance to stabilize and grow.
6. Talk to a Financial Advisor About Retirement
Believe it or not, setting retirement goals is extremely important. One of the purposes of working is to save enough money to retire at a reasonable age.
If you work a full-time job you are probably paying into some sort of retirement. Schedule an appointment with your retirement representative to ask questions such as:
- What age can I retire?
- How much do I already have saved?
- How aggressive is my money being invested?
This information will help you put into perspective your finances in the long run. A meeting with a financial advisor can also help you better understand your goals and how to make your money work for you.
If you don’t have a full-time job and are entirely responsible for setting up your own retirement savings, it’s still good idea to talk to a financial rep to set up a ROTH or a ROTH IRA.
Not sure what that is? Check out this post here to see if a Roth IRA is right for you.
Make this year that year you successfully stick to your money resolutions. While it might seem overwhelming at first, you will soon get into the great habit of making good money habits a priority in your life.
Best of luck with your money resolutions!