New Year’s resolutions can seem impossible to achieve after a couple of weeks, especially if you bite off too much. But goals don’t have to be difficult or monumental to be effective. What you’re trying to do is change a habit – or two.
January begins – and many of us resolve to improve in grandiose fashion. Some of our New Year’s resolutions seem about as accomplish-able as winning the lottery – like losing 40 pounds, being debt-free, making more money?
According to a poll from the Marist College Institute for Public Opinion, Americans’ most popular resolutions for 2018 are:
- be a better person (12% want to)
- lose weight (12% want to)
and not far behind is:
- spend less/save more money (6% want to).
So what score would you give yourself in regard to managing money last year? You say you thought about money a lot? But when it came to taking action…you procrastinated, considered it was too much “to do” or didn’t have enough time to get it all done that week/weekend?
You are not alone.
It’s easy to have good intentions but follow through with mindless gestures – like tossing the bank statements in the “I’ll-do-it-when-I-have-them-all” pile – and forgetting to do anything. Or not tallying those annoying nickel-and-dime expenses you swiped on your card every week. Or letting subscriptions/memberships you don’t use still be deducted automatically. And making a budget…well, that can wait another week, right?
So as the new year begins (and after you see how much holiday spending shrank your bank account), it’s a great time to get financially organized or resolve to spend less/save more.
But just having good intentions, organization tools and checklists won’t cut it. Spending was an easy habit to acquire. Saving is not.
You need a good action plan.
#1 – Forget broad goals. Map out steps 1,2,3…
The key to making financial improvements – and to accomplish most any New Year’s resolution – is breaking down a goal into specific, actionable steps. Your real intention should be to have your goal become a habit.
In themselves, your bite-size steps may not seem like very significant accomplishments. But when you look back after a few months, you should see the overall progress. Be patient. It takes time to build a new habit and replace an old one. In fact, studies show that it takes 66 days, on average, to create a new habit.
Let’s see how this one-step-at-a-time approach bears out for some popular financial resolutions, like:
- Spend less/save more
- Get financially organized
- Get out of debt
- Make more income
All very good goals, but you probably notice how overwhelmingly broad they are. The missing link…How to actually accomplish any of these?
For example, what new habit(s) will you create to save more money? Here’s a 7-step checklist to consider, because you can’t save what you don’t know you’re spending:
- Create a simple budget – this is an estimate of income and expenses you plan to have, not a hindsight view of what you spent. Opt for a budget that covers your major categories and do monthly or annual, whichever works better for you. If you want, download my free budget template.
- Analyze expenses for subscriptions/memberships for recurring services such as on-demand entertainment (Netflix, Hulu) and sports sites (ESPN), data storage, ancestry.com, Amazon prime, fitness facilities. Can you eliminate what you aren’t using?
- Review insurance policies for your vehicles, housing, health coverage. Can you lower the premiums you pay by increasing the deductible limits?
- Call internet, phone, satellite radio, and/or cable providers to see if you qualify for a cheaper plan or should switch carriers.
- Review credit card and bank statements to see if you are being dinged for fees you could avoid – ATM charges, late fees, insufficient funds.
- Check your retirement plan contribution. Opt to get your company match – it’s free money for retirement savings.
- Set up a reminders so you’re notified and remember to use subscriptions, rewards points, airline miles, bonus offers, etc. before they expire.
On the other hand, if being more financially organized is your goal, you need to know exactly what specific tasks would help your efficiency. Here are 10 organization steps to consider:
- Make a list of all financial accounts – numbers, amounts, locations.
- Review/update how each account is titled – account holder(s) and beneficiaries.
- Close unused accounts to reduce financial statements you receive.
- Make a list of credit cards; copy fronts/backs and store this paper copy in a safe place.
- Create/update your net worth statement (“what you own” minus “what you owe”).
- Gather important documents (birth certificates, passports, property deeds, stock certificates, wills, vehicle titles, etc.) for safe storage (in a bank safe deposit box, for example).
- Set up or review your on-line bill pay; automate recurring bills.
- Review/adjust your budget so you can foresee and plan for major expenses for the year.
- Create a system to help you stay organized throughout the year (labeled folders, file boxes, spreadsheets – whatever works).
- Gather what you will need to prepare 2017 income taxes – year-end statements, 1099s, pay stubs, charitable contributions, receipts, medical expenses.
You get the idea.
#2 – Do the reps to build your muscle
If you aren’t used to doing financial tasks on a regular basis, it can be hard to get used to practicing it. Be patient with yourself and eventually those tasks will likely take you just a few minutes, or at least a lot less time than it did. Don’t expect miracles right away.
#3 – Set deadlines
Is this obvious? Without a deadline to complete your tasks, “someday” just never comes. If you want added incentive, reward yourself when you complete a task on time.
#4 – Boring works – and no cheating
With specific steps and a good checklist, measurable results are easier to see. And, you can’t fudge it – either you completed a step or you didn’t. With a broader goal, you may be tempted to convince yourself that you’re making more progress than you actually are.
What if you do mess up or procrastinate a bit? Don’t be too hard on yourself. Our brains are hard-wired to take the path of least resistance and fall back to original habits. So shake it off and get back on track. No need to compare yourself to others either – what you’re trying to do is change your own habits!
Is getting financially organized, getting rid of financial clutter, or spending less money one of your New Year’s resolutions?