If your budget could talk, it might suggest that you make some New Year’s resolutions that will help you set your financial house in order. The way you handle your money has a huge impact on many aspects of your life. By setting financial goals at the beginning of the year, you have the chance to make changes that will have a positive influence on your life as a whole.
Brainstorming, Finance-Style
Like other types of New Year’s resolutions, financial resolutions often fail because they are not realistic. By trying to do too much, too fast, you can sabotage your plans and become discouraged. Before you set your goals down on paper, try a brainstorming session. Write down all of the things you would like to accomplish this year – financially, professionally, and personally.
Next, prioritize your ideas, assigning a financial and time cost to each goal. Many of your ideas may seem to have little to do with your budget but actually do cost money. A goal like decluttering the garage may seem like a freebie, but may end up costing you a few hundred dollars to buy some shelving or for trash hauling services or refuse fees.
Finding Money for Your Resolutions
Once you have a good idea about which goals are the most important to you, it’s time to find the money to finance your goals. Whether you are saving for a new couch or planning to pay off a credit card, you will need to set aside money to pay for your resolutions.
Finding the cash to finance your new goals may seem daunting, but with a positive attitude and a touch of creativity, chances are good that you can afford to make significant progress toward your goal. There are lots of places to look for the money you need, such as
- Heating and cooling expenses — could you cut costs by lowering the thermostat at night or while you are at work?
- Meal planning and grocery shopping — planning meals and making a list can help prevent impulse buying. Also, avoid shopping for food when you are hungry — another impulse driver.
- Gift-giving — do you really need to spend significant money on gifts? In this day and age, we all seem to be acquiring a lot of “stuff”. Are you sure your friends and family really need the gifts you give them or are you trapped in a reciprocal gift-giving cycle that no one really enjoys? It couldn’t hurt to talk to the family about establishing value limits for gifts, or exchanging names instead of buying for everyone. The simple (cheaper) gifts that have a lot of thought behind them are often the most appreciated.
- Entertainment — do you need to eat out as often as you do? Could a pot-luck dinner with friends be just as much fun and much cheaper? How many of the channels in your cable package do you actually watch? Could you cut that back, or even eliminate it?
- Vacation costs — these are the hardest things to give up. Your vacation is your reward for all the hard work you do, right? Maybe you can think of a less expensive vacation than you are accustomed to, like taking a few long-weekend trips close to home. That way you can save a lot of money and still enjoy visiting a new place with those you care about. Or perhaps you could make the vacation one of your goals — something that you save for. It will increase the incentive to save and prevent the post-vacation blues of paying off credit card charges after the fact.
Remember that you don’t have to eliminate items from your budget, you just need to adjust your spending.
Track Your Progress
Making the sacrifices needed to reach your goals can be frustrating if you lose sight of where you are going. Keep track of your progress and reward yourself for a job well done. For example, if you are saving for new furniture, you might print off a line drawing of a couch and color it in as you add money to your furniture fund.
Don’t be discouraged when “life happens” — that is when your situation changes, or as in 2020, the whole world changes. In those situations, you may have to adjust your goals, but you will have a framework to help you manage that.
While you think about your New Year’s resolutions, consider adding some financial resolutions to your list of goals this year. Using your money wisely provides you with the resources you need to keep debt under control and to reach important personal goals.
Leigh C. Taylor, LIT
