5 Simple New Year's Resolution Goals to make in order to help improve your finances
"It's a new year! Is now the time to seriously start thinking about dumping the bad habits, and focusing on getting rid of debt, building wealth, and planning for early retirement?"
By: Allan R. Kirby
What is the importance of a New Year's resolution for your finances?
It is a tradition, making the all-important New Year's resolution where we make promises to ourselves to do something better in the coming year. I have always made a News Year's resolution relating to finances because I feel it's important to set a goal and follow through on that goal for the coming year. Although I have not always been successful at achieving all of my goals, I have still followed through until years end.
What my New Year's resolution has taught me is that it's best to find a simple goal and follow through on it. Basically, I find I am most successful when I keep my resolutions to a simple lifestyle change or improvement, such as;
Saving extra money for retirement.
Paying off a loan.
Getting rid of a credit card.
Saving for a trip!
The point I am trying to make is that people do not tend to stick with their resolutions, however, developing simple strategies that require you to make small lifestyle changes will ultimately help you succeed.
So why is it important to make a resolution with your finances? It encourages you to set a number of goals to work on throughout the new year and give hope you can achieve those goals.
The following are some great ideas to help you start the new years on a better financial footing;
Goal #1: Cutting your spending
This is a tougher one so I would suggest trying to keep it something small, however, cutting spending will help you reduce expenses and give you more disposable income that will enable you to pay off debt or to save. As I often say cutting spending will have an immediate impact on your finances.
As I suggested, keep it simple, find one or two things you can do to cut back on, when people try to do too much too fast, they tend to get frustrated and then revert to their old habits. Making lifestyle changes does not have to be a sprint, take your time, and do it slowly.
How to save money: Find one or two items to cut back on, it could be droping a subscription, eating out one day less a week, maybe buying groceries at a discount store.
What are the 8 ways to help reduce spending and save money?
Stop dining in our eating out.
Cut ties with your cable company and stream.
Revisit your cell phone bill, see how you can save money.
Look at using discount stores for your groceries and clothing.
Use no fee, high-interest checking, and savings accounts for your banking.
Cut back on alcohol and beer if you drink and try to buy when on sale.
Avoid impulse buying and keep purchases to what you need.
Do a subscription review and cut the number of subscriptions or switch to a lower-tiered subscription.
Goal #2 Paying off your credit card debt
This is a common financial resolution but it's actually a simple goal you can set for yourself and follow through on. Now it does not have to be all of your debt, you can set a goal of paying off one of your high-interest credit cards and then either get rid of it or figure out how to better manage using the card. The following three steps can help you with your goal of paying off one or all of your credit cards and getting rid of that debt.
Three steps people can use to pay off credit card debt?
Stop spending and making impulse purchases.
Set a spending budget for your credit card.
Pay more than the minimum payments each month.
Goal #3 Develop a plan to save more money
This is a great goal to start the New Year. I in fact made this a New Year's resolution of mine several years ago after I was faced with job loss. At the time I was finishing a tough year and felt I did not have adequate savings and knew I needed to adjust. So I gave myself a new goal which was to ensure that I save money every single pay regardless if it was a lot or a little. I also began to take a serious look at my retirement and also started to put more money into my retirement savings. Although I will never achieve FIRE (Financial Independence, Retire Early) I have used it as a guide to help me make incremental improvements to my retirement goals. This could be a great New Year's resolution, planning a way to retire early! but admittingly it is a lofty goal.
What can you do to improve savings?
Setting up automated savings and putting a set amount into a high-interest savings account.
Transferring a small amount of money on paydays into an account designed for emergencies.
Cut spending and plow that money back into a savings account.
Goal #4 Start investing to build wealth
One of the smartest financial decisions I made when I was a little older was taking control of my investments and learning to invest myself. It was not easy at first but I saved a significant amount of money on fees by investing myself. Today many low-cost trading platforms allow you to invest small amounts of money into ETFs and stocks. In fact, you can even buy fractional shares of big names such as Amazon, Google, and Apple. Believe it or not, investing in the stock market is one of the few ways most people can build wealth easily because the barriers to entry and very low today. I have two trading platforms to suggest.
Make a new year's resultion to start investing to help you build wealth, you can start with a small amount of money using inexpensive trading platforms such as Robinhood and Charles Schwab.
Why use Robinhood? Because there are no minimum balance requirements for Robinhoods account, No Commission Fees; so their platform provides free stock, options, ETF, and cryptocurrency trades.
Why use Charles Schwab? There is no minimum balance requirement for the Schwab brokerage account, Additionally no fees to maintain the account and zero fees to purchases stocks and ETFs.
"Learn more about why it is important to start investing even with little money and experience."
Goal #5 Save for something for yourself and your family
Getting your finances in order can actually mean developing a plan to save money to go on a big trip or buy something significant, maybe even getting a small renovation done. No matter what it is, it's a great feeling to make a resolution to save for something and then following through and achieving that goal. It's even icing on the cake when you can finally do that big trip or make that big purchase with cash and not getting into debt. This eliminates the buyers' remorse that many people have when they make a large purchase with no money set aside.
As I mentioned earlier, many people do not follow through with their resolutions but this is one I do in fact find people achieve more often. It's likely due to the fact the sacrificing leads to a big reward. But that is ok, saving for something and having the money to pay for it using is something that we walking away smiling about.
"The Best New Year's Resolution I made: Setting a goal to save for a trip with my wife and I, it took two years to save up and plan but it was worth it."
Final Thoughts on making a new years resolution to improve your finances
There are so many other goals you can set for yourself, such as learning to budget, finding a new job, going back to school, however, whatever your goal is, it never hurts to set up a realistic goal and spending the year trying to achieve that goal. Granted not everyone sticks to their resolutions, but I have found that if you make simple goals, that are realistic and achievable you will achieve them. Trying to do too much too fast can overwhelm most people which is why people failed, but making small incremental changes will help you achieve your goals and allow you to finally take control of your finances.
To give you an example, try a simple goal of saving $500 over the course of a year, maybe $1000? if you achieve that goal, maybe set it a little higher. This is what I did, I kept my goal of savings realistic and once I achieved the goal mid-year, I then set the bar a little higher. By the end of the year, I had not only achieved my goal, but I had also more than doubled what I had origionally planned to save. It was not always easy but for me, it was great to finally make a New Year's resolution and see it through. l learned that it can be done.
This is a MySmallBank.com blog written by Allan R Kirby, who writes and produces Personal Finance articles and video