It’s that time of year when we all starting thinking about resolutions.
Resolutions are good things; the problem is in the implementation and follow-through. Most of us make new year goals in two distinct areas; the first in health and the second with money.
If you’re thinking about creating some goals this year, I have a few strategies that just might help you keep to your financial resolutions and see you to the end goal.
How To Reach Your New Year Financial Resolutions
1. Less IS More
I read a blog post a few months back, and her goals included the following:
1. Significantly increase our giving to needs in our community and around the world. This is an ongoing goal, so we’re keeping it uncrossed off from the list.
2. Pay cash for a replacement washer and dryer for our very used set.
3. Pay cash for a replacement for van
4. Pay cash for a couch for our basement family room.
5. Pay cash for bunk beds for the girls.
6. Fully fund our IRAs.
7. Bump up our retirement savings to 10% of our income.
8. Fund our children’s educational savings.
9. Double our Emergency Fund Savings (Instead of having around six month’s worth of expenses set aside, we’re planning to set aside a year’s worth of expenses.)
10. Save at least 40% towards our Commercial Real Estate Investing Goal
I was overwhelmed and exhausted just reading this list. You too?
While I applaud this family for having such wonderful goals which include not using credit cards, ensuring their families security via their emergency fund, and their desire to give generously to others in need; to someone just starting out, these goals can be overwhelming.
Here’s what I suggest: Have two goals and work diligently on meeting them. Once you have achieved the goals you’ve established, you can add another one to the mix. This way you’re not so overwhelmed that you ditch your intentions altogether.
For example, if you are trying to get out of debt and don’t have an emergency fund in place, those two issues need to be resolved first and would be your first two goals. You can break these goals down into even smaller bite-sized segments or objectives that further define your specific actions.
The goal would be to become debt free, and the objective would be to pay off $5000 worth of debt in the first year. Once you’ve reached the first target, you can write the next objective towards meeting the primary goal.
The second goal would be to establish an emergency fund, and the intention would be to save $1000 in the first year.
The objectives can be for any time frame you establish. It could be as short as a three-month target to as long as a year.
- There’s No Magic Bullet To Getting Out of Debt
- The Six Steps of Savings As A Means of Getting Out of Debt
- The Joy of Saving
2. Get Real
We all have goals, and that’s great, but without a plan, the goal is doomed to failure.
Let’s say for a moment you want to get out of debt this year.
Your first action is to determine just how of an albatross you have around your neck. Get out a piece of paper and write down the names of all your credit cards, how much interest they have and the outstanding balance. Now add it up to determine your total debt. Include student loans, car loans, your house, anything you want to pay off fast.
There are lots of ways to go about reducing and paying off your obligations. Some people like the snowball method and others find a different strategy to accomplish their goal. Personally, I liked the snowball method and used this method myself when I was in debt and working at becoming debt free.
Here’s how it works:
- Arrange all of your credit card debts from the lowest balance to the highest.
- Plan to pay minimum payments on all but one targeted debt.
- Designate an amount of the minimum payment you can apply for this one card.
To experience a win as soon as possible, pay the card with the lowest balance first. For example, if you have 10K on one card and $750 on another, pay the minimum on the 10K and put any extra payments toward the card with $750.
When the first card is paid off, you’re going to feel elated – and you should! Give yourself a huge pat on the back.
Now, roll the entire amount you were paying on the first card into the payment on the 10K card. You’re paying the same amount each month towards your debt, but the amount “snowballs” until you’re eventually paying the whole amount toward the biggest and last card.
- 8 Warning Signs Your In Financial Trouble
- 11 Habits of People Who Are Debt Free
- The #1 Best Way To Bust Through Your Money Roadblocks
3. Get Accountable
It is much easier to be accountable to someone else when trying to reach your goals.
Find a friend, coach or family member who can hold your feet to the fire as you try to reach financial security. This way ever time you reach for your wallet to buy something you don’t need, they can remind you what you’re working towards!
Be honest with your accountability partner. Let them know how much debt you have and the goals and objectives you’ve laid out for 2017. Meet to discuss your progress regularly.
If you’re married, your husband or wife can be your accountability partner. You can work together and hold each other accountable to the promises you’ve made.
Remember, financial freedom and security IS attainable. You can do it this year!