Jan 07, 2015 A Great New Year’s Resolution: Improve Your Finances

by 5i Research

Tom Drake A Great New Year’s Resolution: Improve Your Finances

With another year behind us, it’s common to consider your situation, and resolve to do better. Many people are particularly interested in creating financial new year’s resolutions. If you want to take control of your finances in the coming year, here are some things to consider about making resolutions.

What Do You Want to Accomplish With Your Money?

The first step is to identify what you want to accomplish with your money. One of the reasons that so many new year’s resolutions fail is because you don’t choose something that is important to you. If you truly want to stick with your resolution, you need to figure out what matters to you, and how your money fits into that.

Think about the reasons behind your financial new year’s resolutions, and visualize the kind of life you hope to lead once you have made progress on your goals. Whether you want to pay off debt, boost your retirement savings, start a new business, or save up for a down payment on a house, you need to make sure you are working toward something that matters to you. Once you know what you hope to accomplish, you can set a goal that really matters to you — and that you will be more likely to accomplish.

Break It Down

One of the best ways to successfully accomplish your financial new year’s resolutions is to choose one major goal that you can break down into smaller, more manageable steps. Don’t try to accomplish everything all at once. Instead, start with your most important goal. If what you want most is to pay off debt (like most Canadians), that’s the goal you start with. You can move increasing retirement, or another goal you have, to a lower position on the list.

Now that you know your most important goal, you can break it down into steps. If you want to pay down debt, the first step is to figure out how much you can put toward debt reduction each month. Once you know that, you can create a plan for coming up with that money, either by cutting costs or looking for ways to earn more money.

A similar process can be followed when you want to increase your retirement savings. If you want to boost your retirement savings by 30%, there is no reason to try and do it at once. Break it into steps. What if you increased how much you put in by 5%? So, if you are contributing $200 a month, your ultimate goal might be to contribute $60 extra (30%) each month. Instead of trying to jump to that immediately, you can start by contributing an extra $10 per month. Then as you are more comfortable, you can bump that up by another $10 to $20. By the end of the year, you will be setting aside more money in your retirement account each month.

Breaking down one goal like this is one of the best ways to ensure that you keep making progress, and that you accomplish what you set out to do.

Track Your Progress

Finally, make sure you track the progress you make with your New Year’s resolutions. When you make progress, market the occasion to help you stay motivated. Every couple of months, review what you have done. If you are off track, see what you can do to get back in line. The nice thing about breaking things down and tracking progress is that you don’t have to give up your resolution as lost if you get off a little bit. You can tweak the situation to get back in line with what you want to do.

With a little planning and effort, you should be able to move forward with your finances. New Year’s resolutions can help you learn to better manage your finances, be happier with your life, and make good progress. Don’t get hung up on a long list of things to do, though. Instead, figure out what’s most important, focus on that first, and then break it down. You’ll be more successful, and more likely to develop long-term lifestyle changes that stick.

Tom Drake is a financial analyst and personal finance blogger living in Airdrie, Alberta. He writes at MapleMoney.com and FinancialHighway.com.

No comments

No comments have been posted yet.

Comments

Login to post a comment.