If 2015 did not bring you the financial results you had hoped for (and even if it did), year-end is the time to set your resolution to make 2016 a more plentiful year. How can you set yourself up for a more prosperous New Year? In addition to working with your financial planner, try setting a few financial New Year’s resolutions.
Resolution #1 – Intend financial success for 2016
Before you can become financially successful, you need to desire financial success (tweet this). This is such a simple step that many forget to take it. If you make no other resolutions to kick off the New Year, at the very least, set an intention to enjoy greater financial security and abundance. You can take it a step further and imagine what your life will be like with financial abundance—for example the things you will surround yourself with, the types of vacations you will take, the new opportunities you will enjoy. As you move forward, this intention will help you gravitate toward saving money and setting short- and long-term goals.
Resolution #2 – Save a little (or a lot) every month
You may have heard the sage advice to pay yourself first, but how many people do you know who actually follow the advice? The trick to keeping good on this resolution is to set an attainable and flexible goal. You can start low (as low as $10 to $50), saving more as the months pass and as opportunity arises. You can also try setting a savings range, rather than a specific amount, so that you can save less during leaner months and more when you have it. Setting realistic and flexible goals will help you establish the habit of saving because you will be less likely to give up.
Hint: I have found that a great way to make savings a habit is to set up an automatic payment system so that I don’t have to remember to move money around to pay myself. From each of my bi-weekly paychecks, an amount is automatically deducted and deposited into my savings account. I don’t see it or think about. Sometimes naming your savings account can remind you of its purpose and keep you from dipping into it!
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Resolution #3 – Maintain a zero balance on your credit card
Paying off your credit card balance before putting money in your savings account often results in higher savings. Why? Current interest rates on savings are nominal—typically less than 1%—compared to the average variable credit card rate of 15%. By paying off your credit card balance, you are essentially earning a 15% return on your money, versus the 1% return you would earn by placing the money in your savings account.
There are some low-interest-rate credit cards out there if you need to carry a balance. Be wary, most reward cards carry a higher than average interest rate. You will save a lot of money every month by simply keeping your credit card balance(s) at zero.
Resolution #4 – Eliminate unnecessary daily purchases
Do you buy a cappuccino every morning? Does your lunch routine include a trip to the deli? One cappuccino doesn’t cost more than a few dollars but five in a week can lighten your wallet by $15 to $20 or more. If you’re buying lunch every day, you can drop another $50+. Over the course of a month, your cappuccino and lunch bill could cut up to $300 out of your budget, which is a considerable amount of money.
Think about all of the small expenditures you make in a given day or week and do your best to eliminate them. You can make your caffeinated beverage at home and bring it with you. Make a healthy lunch for yourself while you cook dinner at night and throw it in your bag before you head to work. You may find, once you get started, that you can eliminate thousands of dollars in unnecessary expenses over the course of the year and you may be surprised by how much fun you have shifting your spending habits and reaping the rewards.
Resolution #5 – Follow through on your goals and budget
Before you begin any journey, you need to know where you’re going. If you consider achieving financial success a journey (which I will encourage you to do), you should have short- and long-term goals to guide you. Your goals are unique and personal and will be based on what is most important to you. For example, if you are sending children off to school in a few years, you may want to set goals for building a 529 savings account. If you want a new boat that costs $1,200, your goal may be to save $100 a month.
In order to achieve your goals, you will want to set and follow through on a budget. If you don’t already have one, you can begin building a budget by writing down all of your monthly expenses (including food, monthly savings, incidentals, and fun money). You can then determine how much you have left in the budget to go toward attaining your other financial goals and add them to your budget. Throughout the year, your resolution will be to keep track of your spending and make sure you are putting your money into your goals, rather than spending it on less important items or experiences.
Financial success is subjective. Your idea of success will not look like someone else’s idea of success. Determine what you want to achieve and set yourself up for triumph by using your money wisely, sparingly, and with purpose.
Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.
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