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Sticking With Your Financial New Year’s Resolutions

Sticking With Your Financial New Year’s Resolutions

New Year’s resolutions have a long history, but not everyone feels the need to dedicate time to changing habits or improving their life in other ways at the end of each year. If you are on the resolution bandwagon, you are far from alone. More than 45% of all adults in the United States resolve to change something in the upcoming year, and some of the most common commitments are to financial well-being. Some decide to spend less and fatten up their savings, while others create goals for major purchases like buying a house. Paying off debt falls into one of the most frequently cited resolutions, too.

While decisions present a clear opportunity for change, not everyone meets their goals with ease. In fact, only 8% deem themselves successful in reaching a New Year’s resolution by the end of the year. If you’re concerned with how you might live up to your financial resolutions for this year, consider these helpful tips.

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Get to know Your Why

The first step to meeting the financial goals you’ve set for yourself in the upcoming year is having a strong understanding of why you’re trying to achieve them. It’s great if Betsy down the street is trying to pay off her mortgage, or Tom at the office wants to start investing in the stock market, but your goals should be unique to your bigger picture.

Putting more in your emergency fund by spending less throughout each month may allow you to avoid debt, like short-term loans or high-interest credit cards when a big expense comes up; similarly, working toward paying off your credit card balance means you’ll have more to use for travel or retirement savings. Knowing the why behind your resolution is one part of the process that allows you to stick with it throughout the year.

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Try Autopilot

Achieving your financial resolutions often comes down to willpower, but did you know you have a reliable partner in the process? Automating financial activity – from paying down debt to saving for a rainy day – is one of the easiest moves you can make toward changing your financial life. Nearly all financial institutions give you the ability to set up automatic transfers from a checking account into a savings account, and others even provide a way for you to direct deposit funds into savings from your paycheck.

Employers who offer a retirement plan give you the chance to set up automatic contributions each pay period, making saving for the long-term a breeze. If you’re working on paying down debt, most lenders give you the opportunity to establish automatic payments either for the minimum amount due or a little extra. Whatever you’re working toward this year, setting your goals on autopilot is a helpful practice.

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Make them Realistic

Another lynchpin in meeting your financial resolutions is knowing you can indeed accomplish what you’ve set out to do. That starts with being realistic about what you can feasibly set aside for savings, retirement, debt, or investing by taking a close look at your cash flow. No one wants to spend time budgeting out every last penny of their paycheck, but doing so gives you an opportunity to uncover overspending or gaps in your plan. Once you have a solid idea of what you’re able to use for your financial resolutions, set your sights on achievements that are within your reach – and your budget.

Get a Partner in Crime

The final tool to being successful in the new year is finding an accountability partner. Whether they hold your hand when you fall off the resolution path, or they give you a slight (or hard) nudge to motivate you, having someone who understands why you’re trying to achieve something different can be a lifesaver. Friends, family, and co-workers can be great accountability partners, but don’t forget you have professional options, too.

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Financial New Year’s resolutions are no different than resolving to lose weight or spend more time with your family. They take a heavy dose of commitment from the start, and even more clarity as to why you’ve added them to your big to-do list. Adding in these tools will help you stick with your financial resolutions, no matter how big or small they may be.

Featured photo credit: money/https://pixabay.com/en/money-dollars-success-business-1428594 via pixabay.com

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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