A new year can be a time of fresh starts and clean slates. For many, the new year represents a chance to begin again, creating habits that will help you to pursue your best life.
Finances are often high on the list for those looking to make improvements, both in terms of setting specific goals and making changes to the day-to-day handling of their monies. Read on for some smart strategies that will help you keep your financial new years’ resolutions.
How Can I Improve My Finances in the New Year?
The desire to improve your finances is a powerful motivation to make new years’ resolutions. Whether your goals are to save money, reduce your debt, or increase your income, improving your financial standing will have a direct impact on your quality of life.
Before you can make improvements, however, you need to fully understand your financial situation. The first and most important step is to take an honest accounting of your current finances. There is no replacement for making a budget, which will clearly present in indifferent, black-and-white numbers the amount you are making and spending.
Knowing the contours of your finances will help you define and sharpen your desired objectives, while presenting a clear picture for where you should be focusing the brunt of your efforts in the coming year. Not all resolutions are created equal, however, and a key component of successfully fulfilling them relies upon your initial framing.
An effective method for setting resolutions is to adhere to the SMART method of setting goals. This stands for setting Specific, Measurable, Achievable, Relevant, and Time-bound goals. In practice, this will help ensure that your goals become tangible workplans, rather than remaining both esoteric and far-off dreams beyond the horizon.
Suppose your goal is to save up for a down payment for a house. It is important to define a specific amount of money that you intend to save in the coming year, while making sure that this number is within the realm of the possible. If your goal is to put away $20,000 over the next twelve months, it often helps to break this down into smaller chunks of $5,000 a quarter. Once you know that you need to save roughly $1,667 a month, you can begin crafting a concrete set of actions that can help you decrease your spending by that amount.
The importance of goal setting is paramount. However, your objectives will remain unfulfilled wishes unless you can create a workable plan to reach them.
How Do You Stick to New Years’ Money Resolutions?
Sticking to any new years’ resolution requires commitment, as by definition you are making some changes to your existing lifestyle or modes of operation. There are a number of tried-and-true methods for pursuing your resolutions.
(1) Find someone to hold you accountable. It is easy to give up when no one is watching, but it is harder to justify quitting if it involves disappointing others. Find a friend or a relative who can help you review your progress towards your goals on a regular basis. This works best if you can perform this task for each other. This is a form of external discipline–some might even call it positive peer pressure–that can provide additional motivation when times get tough.
(2) Be kind to yourself. No one is perfect, and it is okay to fall short. Do not let yourself become so discouraged that you give up entirely. Rather, acknowledge that we all have good days and bad days (or weeks, months, or even years) and that you will do better next time. It is all part of the process.
(3) Celebrate small victories. One of the key benefits of breaking up your goals into smaller intervals is that it will allow you to feel that you are making progress. If you have reached your stated savings goal after one month, treat yourself to a nice dinner or fun outing. Forcing yourself to forgo all of life’s pleasures is a recipe for unhappiness, while making it less likely that you will be able to continue chasing your objectives.
(4) Keep your eyes on the prize. While it is important to acknowledge small milestones along the way, reminding yourself of the reason that you have undertaken your resolution can help keep you on track to meet it. In other words, put a picture of your dreamhouse up on your bathroom mirror or refrigerator. This will serve as a constant reminder for why you are doing what you are doing.
Conclusion: Set Yourself Up for Success
Establishing unrealistic and overly ambitious goals for yourself is a surefire way to meet with failure. This is true for any type of objective, of course, financial or otherwise.
Failing to meet your expectations can have a snowball effect, making it increasingly harder to follow your resolutions the next time around. The last thing you want to do is get down on yourself after setting your sights too high.
In order to give yourself the best prospects for success, think about your long-term aspirations and then make a plan for how to get there using specific, concrete steps. Make sure that these can be measured, and that they are both achievable and realistic milestones given your current financial status.
Defining financial goals and living a fiscally responsible lifestyle is always a good idea. Using the occasion of the new year to reset yourself on this path of success is a great way to work towards the financial future that you want.
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