The New Year represents a new beginning, a fresh start, a chance to take control of our health, wealth, and happiness to live more fulfilled lives. It is the perfect time to analyze where we could all use personal or professional improvement!
Year after year, exercise and weight loss tend to top resolution charts, but this year Financial resolutions are giving these long-time frontrunners a run for their money.
According to the New Year Financial Resolutions study, the percentage of respondents who say they are considering a financial resolution for the New Year increased to 32%, compared to last year’s ten-year low of 27%.
But while the number of consumers prioritizing financial health is on the rise, the actual resolutions have remained the same:
- Save more money
- Pay down debt
- Spend less
So, why haven’t these Financial resolutions changed in over a decade?
Well, for one, these are resolutions that would improve anyone’s financial situation of any net worth at any time. Saving more, spending less, and eliminating debt improve the overall quality of our lives.
But I would venture to say that the secondary reason these answers haven’t changed over the past decade is because only about 1 in 12 people actually stick to their New Year’s resolutions. The result? The same people are making the same resolutions year after year.
We have compiled a list of 3 Smart Habits that will assist you in sticking to any Financial resolution you make this year.
1. First, Budget
No matter what your specific financial goals are for 2019, you won’t reach any of them if you haven’t mapped out your current financial situation and established a working budget.
Budgeting is the most basic, yet vital tool in money management. You’ll never be able to tackle the “spend less, save more, and eliminate debt” tripartite mentioned above without setting up a budget.
A budget allows you to:
- Eliminate unnecessary spending
- Maximize how much you can contribute to savings and retirement
- Focus on long-term goals over short term desires
Ultimately, this disciplined behavior is about adjusting your present spending and saving habits to complement your long-term financial goals. It is a practice that ensures you are in control of your money, and by extension, your future.
2. Focus on the “HOW”
It’s much easier to talk about improving our lives than it is to implement real change. The key is to establish a strategy you can reasonably put into action day after day.
For example, prospects Tim and Karen know that they want to reduce their accumulated debt this year. They haven’t researched which of their debts have the highest interest rates or how they will access funds to reduce the debt balances. With no plan, Tim and Karen are set to fail.
Clients Steve and Joan also wanted to reduce their debt. Steve and Joan sat down, listed all their debts, identified those with the highest interest rates, and agreed to spend 20% less on luxury items each month in order to reduce current debt balances. Because Steve and Joan had a budget set up for 2018, they were able to identify the exact luxury expenses they would eliminate to make funds available for their debt payments. Steve and Joan established a reasonable plan and are ready for success.
3. Adjust Long Term Goals into Shorter Increments
Financial resolutions often call for short-term sacrifices to realize long-term goals such as funding a child’s education, buying an investment property, or saving for retirement.
Since it can take time to realize the future benefits of our present sacrifices, it’s very easy for motivation to go stale. However, setting shorter, incremental goals with more frequent targets, can help to combat this possible loss of motivation.
Set goals daily, weekly, and monthly to keep moving in the right direction. In addition to keeping you fiscally on track, reaching these more recurrent milestones will boost your confidence and encourage you to stay the course over time.
We at Aventine Financial Group understand that implementing a plan to reach your financial goals can be overwhelming. Schedule a complimentary consultation today to discuss how our Certified Financial Planners™ can assist you with your financial planning needs. Let us help you Plan, Protect, and Grow your net worth.
Frank J. Fiumecaldo, CFP
Founder & Partner