This time of the year tends to make us reflective. We look back and assess what we’ve done well and what we’d like to change as we move forward. The clean break of the New Year gives us a great opportunity to make new goals for our personal lives, careers, and our finances. Out with the old and in with the new. We always have the best intentions for our New Year’s resolutions, but very few people have kept their resolutions by the time summer rolls around. If you’re one of the many who plan to include financial goals in their aspirations for the New Year, how do you stick to this type of resolution?
Make Your Goals Attainable
I hate to be the bearer of bad news, but for most people “I want to be a financially independent by 2018” is just not a realistic goal. Aim for something that you can actually achieve, like zero credit card debt, a hefty chunk of savings, or a well-invested sum of money. Don’t set yourself up for failure. Go ahead and make big, long-terms, but you have to start somewhere. Remember to make your goals SMART: specific, measurable, achievable, realistic, and time-bound.
Budget
The first step in setting a budget is to review all of your spending from the previous six months – any expenditures should be categorized into necessary and unnecessary. Some of your expenses can’t be changed, such as your rent or mortgage, but there are many line items that can easily increase if you don’t set limits on yourself. Just like with goals, you want to make sure that your budget is realistic, or you’ll just end up going over budget and feeling discouraged.
Minimize Spending
Going forward, keep track of all spending to ensure you’re not going over budget. You just need to sit down and assess your financial situation at least once per month, to ensure everything still adds up and your spending is in line with your predictions. If you can do this, you will be much more likely to keep your financial resolutions. Regular spending check-ups will help prevent spending from getting out of control. And, having specific goals will allow you to track your progress.
For the past couple of years, we haven’t really budgeted or done any type of regular review of spending. Instead, the goal was just to spend as little as possible and cut every expense possible. Our financial resolutions are still being worked on, but one thing we want to change is to do more tracking of our money goals in 2017. I’m working on a whole post outlining how we plan to regularly assess our financial status in the New Year.
Maximize Saving & Earn More
Every time you overspend on something, consider it as money taken out of your savings. If it’s a treat that you really want, you may have even considered spending your savings on it anyway. If you wouldn’t consider wasting saved money on a purchase, it’s probably not as much of a treat as you thought it was. After Christmas is a great time to get started on your savings. Sell your unwanted gifts and gift cards, to get that first chunk of extra money. Use it to pay off debt or to add to a savings account and start earning interest. Once you see how well you can do with a little bit of extra cash, you’ll want to start adding to it in no time. You’ll be inspired to start looking for new ways to earn some extra money.
Celebrate Successes
Set yourself periodic goals and don’t forget about them. The whole time you’re building momentum, adjusting your attitude, and creating new habits for yourself. You’ll take pride in these achievements. And you need to congratulate yourself for sticking to a new lifestyle, cutting back your spending, and reaching your goals. If you set time-based financial targets, such as “I would like to have $500 in my savings by May 1st” and you hit your target, you should find a way to celebrate it (without spending money). Improving your finances can be difficult – it requires a complete change of attitude towards spending and a whole lot of self-awareness – so you need to acknowledge when you’re doing well.
Keep On Readjusting
Sometimes things don’t go so well. You might slip up and overspend on something, you might fail to keep your accounts up to date for a couple of months, or something unexpected might come up. Don’t beat yourself up. Be realistic about it. Sometimes things go wrong and sometimes we have a lapse in judgment. We’re only human after all. The important thing is that you’re regularly checking up on finances, so you know if you’re headed in the wrong direction. Just readjust your goals, spend some time getting your accounts in order, and then get back on track. If it helps, use the start of the next month as your new January 1st.
Just Remember: Never Give Up
Nobody is pretending that getting started on a new financial path isn’t difficult, but I can assure you that it gets easier over time. You have to change your entire attitude towards money and personal finances, and there will be times where you question your sanity for even making this resolution in the first place. There will be tough times and you may be tempted to hop back on the more-traditional path. But never forget your end goal. Picture the security and comfort that comes with being financially stable, and imagine all the wonderful freedom that you will have in the future – so much more valuable than material possessions. Always look ahead, don’t beat yourself up when things don’t quite go right, and just keep aiming for your next goal and realize that even small gains will help improve your financial outlook.
I love the SMART acronym and I think the attainable part is most important. You can shoot yourself in the foot from the get-go if you choose goals that are unrealistic or too general. If you have debt, paying it down is a great goal. But to make it attainable you can re-define the goal as “throw an extra $50 per pay period on my Visa bill.”
Mrs Groovy recently posted…How to Become a Personal Responsibility Warrior in Five Steps
Yes – perfect example Mrs. Groovy. That’s why we want to make our goals more defined in 2017, instead of just aiming to “save as much as possible.”
I think the point about readjusting if very important. Goals are very helpful but they make a bad master if you can’t be flexible. I think having kids has taught me this. Things don’t always go according to plan and I can’t resent it if I don’t reach my goals in the way I’d hoped.
Kalie @ Pretend to Be Poor recently posted…The Danger of Christmas
Trust me, the twin thing is definitely a good lesson in being able to adjust if things don’t go exactly as planned. Regular check-ups are so important to your finances, so you have the opportunity to make adjustments before things don’t go too far off course.
Good advice! I don’t know that I’ll be all that focused on money goals directly next year (more health related probably.) But much of the same applies…attainable goals, celebrating small successes, readjusting and never giving up!
Emily @ JohnJaneDoe recently posted…Nine Tips to Make Brown Bagging Your Lunch Easy and Convenient
Thanks Emily 🙂 I can’t wait to read about your goals for the New Year. We should all probably include some of those health-related aspirations on our list of resolutions.
Excellent advice, Harmony. Habits are destiny. Do the right thing over the course of several years and good things are bound to happen. The key, as you said, is to start, be patient, and don’t beat yourself up when you stumble. Merry Christmas, and good luck with your 2017 goals.
P.S. My goals for 2017 aren’t financial. I want to go a whole year without adding anything to my food. No additional salt, pepper, or condiments. Should be interesting. Can I go a whole year without eating a hamburger doused with salt and slathered with ketchup?
Mr. Groovy recently posted…Three Simple Steps You Can Take Right Now to Protect Your Finances
Good luck Mr. Groovy. I’m not sure I would be able to survive without ketchup . . . yes, I’m one of those people. But, definitely a commendable goal. Make sure to keep us posted!!!
I think it is important when setting new year financial goals, that you review the previous year. Consider what worked well and what didn’t and what was learned from that. Perhaps you realize you were eating out too much and if stopped you could save a lot of money. Great tips, thanks for sharing!
Laurie, you’re right about that! How are you supposed to fix mistakes if you don’t know about them? Eating out is one thing we keep in check by reviewing the total spent monthly – it can be a big expense if you let it get out of control.