on December 18, 2018
This year, I challenge you to make one of the most important New Year’s resolutions of all: a financial resolution! Though it may not sound as glamorous as learning to paint or traveling the world, your financial resolution could play an important role in your future happiness and wellbeing.
Have you ever resolved to exercise more often or eat a healthier diet? These resolutions are essentially investments in your future—goals for living a better, healthier life. The same is true for financial resolutions. They are a great way to spur you into action and motivate you to start making better decisions with your money in order to pave a brighter, more secure financial future.
In this post, I give you six ideas for financial resolutions. Take the time to look them over, think about them, and see if one (or a couple) might apply to your current situation.
1. Save more money!
Today, it’s easier than ever to squirrel away some of your earnings into a savings or investment account. With apps like Acorn, which rounds each purchase to the nearest dollar and puts the excess into a bank account, you can save a little each month without having to think about it. If you’d rather not use an app, you could set up automatic transfers from your checking account to either a savings account or a specific investment account.
Remember: Take time to set a savings goal and figure out the best method to get there. Your savings could be used for emergencies, future fun (vacations, a sail boat, etc.), or retirement. Whatever the case, commit to shuffling more money into savings and keeping it there. Treat the money like it doesn’t exist—it is for your future goals, or nothing at all.
2. Pay closer attention
Pay attention to where your money goes. Do you know how much you spend each month on eating out? Clothing and shoes? Car maintenance and gasoline? If you don’t know where your money goes, it’s hard to know where to make cuts.
Try using an app like LearnVest or Mint if you don’t want to go through the effort of saving receipts and entering them into a spreadsheet. These apps will categorize your purchases (or, in some cases, you will manually place the purchase into a category) and display them in a graph so you can easily see the breakdown of your monthly expenditures.
If you’d rather not use an app, try collecting receipts and entering them into a spreadsheet. If you go this route, set aside time each week to organize and enter items.
3. Eat out less
All those $12 lunches add up! You might be surprised by just how much you spend on eating out each month. Plus, if you order even one cocktail with your evening meal, that increases your bill by a significant margin. Keep track of how much you’re spending on dining out and resolve to pack a few more lunches each week or cook dinner at home more often. This lifestyle change alone can save you a significant chunk of change.
4. Plan for long-term expenses
It’s easy for long-term expenditures to sneak up on you. You may not give a lot of thought to your water heater or roof, for instance, until they fail. Planning for future big-ticket expenses will help ease the burden once it’s time to pay up. Think about all aspects of your life—your commute (planning for a new car), your kids (health expenses, college tuition), your home and lawn, etc.
5. Consult a financial advisor
When was the last time you paid your financial advisor a visit? Resolve to stop in regularly and talk finance! You don’t have to navigate your financial journey on your own. Trust an expert to help you with the big money-related decisions in your life.
6. Save for something fun!
Budgeting doesn’t have to be boring. If you’re saving for something fun, it will be easier for you to sock extra money away each month. Consider dividing your monthly savings into two parts—part for emergencies and future obligations and part for something fun, like a vacation or that dream cabin you’ve always wanted.
As the year draws to a close, I encourage you to examine your current financial practices and figure out how you can improve. Make financial resolutions that will help you live your dream life. You can do it! It takes a little discipline and mindfulness, but it will be worth it in the long run.