Financial New year Resolutions
January is finally upon us and for nearly 50% of people in America, that can only mean one thing: it’s resolution time.
Personally, I’m not a fan of new year resolutions. I just don’t believe they work for most people and most things. Lasting change, whether it is in dieting and exercise or finances and spending habits, needs a lot more motivation than the date on the calendar provides. Plus, statistics support me. Only about 8% of people who make new year resolutions are still living by them 12 months later.
That’s why I advocate instead for new beginnings and small steps and January is as good a time as any for both of these. If, like me you plan to forego the resolution and instead to add in a small change or two into your life, consider these four easy financial “resolutions” that can help you finally start to get a handle on your finances in 2016.
Start a Simple Supplemental Savings Plan
We all know saving is important, but it also seems intimidating. Luckily, there are many simple ways to start or supplement your family’s saving account that can net you big money over time.
First, consider an automated savings deposit system that goes out with every paycheck. My husband and I set one up when we first opened our joint account as newlyweds back in 2007. It automatically sends $25 from every one of his paychecks into savings. That’s it, just $25, but it adds up to $600 per year.
Another idea is a daily/weekly graduated savings strategy. In this system, you start small and gradually increase your contribution. The two most popular models I have seen use either a daily or weekly savings system. When you start, you deposit only $0.01 or $1, and then increase your deposit by that much for each subsequent deposit. So on day/week 1, you deposit $0.01/$1, then on day/week 2 you deposit $0.02/$2 all the way up to day 365/week 52 when you add in $3.65/$52. Over time, you will save either $667.95 or $1,378, depending on the system you use.
Be More Mindful of Your Money
Knowing where your money is and where is it going is critical if you want to gain control of your finances and manage your stress when it comes to money. In other words, just having a budget or a spending plan isn’t enough – you need to be aware of how that budget is working on a consistent basis. This is called being mindful of your money and it is easier in the modern era than ever before. For example, you can use an app such as Mint.com or a program like QuickBooks to manage and identify trends in spending and saving. Another strategy is simply blocking off time to check into your personal and family finances in between more formal budget meetings.
Personally, I block of an hour every Monday morning to review both my family and business finances. This includes checking account balances, looking over my bill-paying schedule for the week, and accounting for anything I have missed such as a debit card purchase or unexpected expense. I am rarely ever surprised by what I find, but the act of double-checking what I already know and being mindful about my money gives me a sense of control and peace in terms of my finances that is well worth the time spent doing it.
Tune Out the Ads
Managing temptation is sometimes as important as managing literal dollars and cents. Unfortunately, between social media, email marketing, and good old fashioned consumer outreach, avoiding deals that are “too good to be true” can be tough, particularly following the more free-spending holiday season.
In order to better manage yourself and avoid that temptation, consider taking some time to clean up your inbox and newsfeed. Take you name off of email lists from companies that constantly flood your inbox with the next greatest deal and unfollow those same businesses on Facebook and Twitter. Not only will this save you money (since you’re less likely to spend it on a “one-time offer”), but it will also save you time as fewer and fewer ads take up physical space in your life.
Clean Up Your Financial House
Whether or not you make a formal resolution, January is a great time to literally and symbolically clean house. With the holidays over and long winter days ahead, people usually have more spare time during the winter months and it is important to use that time wisely to take stock and clean up.
Financially speaking, “cleaning out the house” can be as simple as balancing your checkbook or reviewing a budget. January also marks the official beginning of tax season, so it’s easy enough to spending some extra time organizing your finances while you are gathering documents for the accountant or tax program.
Making a new year resolution is a personal decision and if you are among the 8% who actually stick with it, go forth and prosper! However, for the rest of us, making small, achievable changes in our life and our habits now is actually more powerful than a resolution you cannot keep.
Do you make new year resolutions? How do you plan to reset and change your financial management in 2016?