New Year, New (Realistic) Financial Goals
According to U.S. News and World Report, roughly 80% of New Year’s resolutions fail within a few weeks. Since finances tend to be among the top topics addressed by resolutions, that means that by mid-February most Americans have resumed runaway spending, added to their debt and committed other personal-finance sins.
What can be done to stop this failure rate? The key is to set achievable goals. Don’t say you’re going to immediately set aside a year’s salary, reconstruct your entire budget or make other dramatic changes in the short term. Instead, plan a year-long process that will result in progress by next December. Following are some suggestions for getting started.
Goal 1: Take small steps that add up
Americans often complain about money, but we also sometimes spend it recklessly. A couple of high-priced coffees a week, a monthly fee for a seldom-used gym membership, two or three TV streaming services … it all adds up. Take a hard look at your spending and decide what can go. Then save what you don’t spend. Try to have one month’s income set aside by year’s end.
Goal 2: Eliminate month-to-month credit card carryover
There are two pathways to achieving this goal: Make bigger payments on your existing credit card debt and avoid additional debt. Pay with cash (or a cash equivalent) whenever possible, and pay more than the monthly minimum on what you owe. The goal? By year’s end, you’ll be paying off every card every month.
Goal 3: Take full advantage of employer retirement benefits
Americans leave thousands of dollars behind each year by failing to take full advantage of employer retirement-plan matches … and, over time, those thousands of dollars could compound into hundreds of thousands. Invest as much as it takes to get the most out of your employer match and you’ll not only achieve a goal for this year, but you’ll notch some long-term wins as well.
Goal 4: Get smarter.
Learning more about personal finance will make these and other goals more achievable. But, that doesn’t mean you have to get an MBA. Instead, look for free tools or classes (they’re often available through banks, libraries, churches, Employee Assistance Programs and more), sign up for a short course in personal financial management, or read a book and follow its plan. The goal? Complete some kind of personal-finance training program by year’s end.
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Tags: finance, financial health, managing finances, New Year's Resolutions