Making and sticking to financial New Year’s resolutions
Happy New Year! We hope you had a rest over the Christmas/New Year break. One thing that probably didn’t was your wallet. Christmas time can really give your finances a hiding. Buying presents for your family and friends, all the extra food you might need, going on holidays and the fact you may be working less all puts a strain on your finances. If something unexpected happens, you might need a little cash loan to tide you over.
Many of us make New Year’s resolutions – lose weight, spend more time with family, or as we’ll focus on here, get your finances in order.
Think you will succeed first time? Think again. According to a wide range of sources a measly 8% (on average) of people stick to their New Year’s resolutions.
How can you be part of that 8%? Read on:
Be specific in your goals
You might have a financial goal in mind for 2015. Saying “I want to be debt-free” or “I want to have real savings,” – that’s a great start. But you need to really be specific in order to achieve anything. A mission needs a success condition; something that shows you that you’ve made it.
So be specific in setting your finance goals.
Instead of, “I want to be debt-free,” say, “I want to have paid off my car loan by December 31” or “I want to have reduced my home loan ahead of this year’s projections,” or something to that effect.
If you want to have more savings, that’s even easier. Just pick a number and you’ll know exactly when you get there.
Make it tangible
It also helps to have something tangible attached to those goals. You also need to set a definite time limit. For example: “If I save $4,000, I will take my family on holiday to the Gold Coast for Christmas 2015.”
Make it a habit
Really, New Year’s resolutions are just another way of saying “I want to develop a good habit” or “I want to put an end to a bad habit.” Habits come through repetition until they’re second nature. Now that you have your goal, break your goal down into smaller goals. Make these goals weekly, fortnightly or monthly.
Let’s say you want that Gold Coast family holiday. Break this big figure ($4,000) down into 52 smaller goals. You’ll have to put away about $76 a week. That seems more achievable than a huge goal, and you have easy steps to get there. Nominate a day, put 76 dollars away.
Make things easier
Habits are hard to maintain but easy to break. That’s why you need to make it easier on yourself. Set up reminders to practice your new habit daily or weekly with smartphone apps, visual aids around the house or friends and partners. (The latter keep you very accountable – they’re walking, talking reminders!)
Using the saving goal we mentioned earlier, to prevent touching the money, set up a high-interest savings account that rewards you when you deposit and don’t withdraw. You may find you’re successful ahead of schedule.
Don’t be too hard on yourself
People break habits all the time. Don’t be too hard on yourself. You can only really commit to making a change today. Keep to your resolution each day by reminding yourself, keeping accountable and learning from failure if and when it comes. No one, not even your friends and partners helping you with this resolution, expects you to get it right the first time. Every (reasonable) finance goal you put your mind to can be achieved!