6 Ways to Get Back to the Financial Resolutions You Forgot About
Remember back on December 31, when you vowed this would be your year to get financially fit? How’s that working out for you, now that it’s mid-year?
If you’re like many Americans, it might not be going so great. Turns out, many folks forget or give up on their New Year’s resolutions by January 17 —and by spring, those good intentions are a tiny speck in the rearview mirror of life.
But that doesn’t mean you can’t get back on track. Financial resolutions are among the most popular each new year because we really do want to feel more secure about the future. The problem is, we tend to go too broad.
We say we’ll “save money” or “get rid of debt” or “stop spending so much.” But according to fans of the goal-setting acronym SMART (specific, measurable, achievable, relevant, and time-bound), those resolutions aren’t the most effective.
So let’s talk specifics. Here are six tips that can help you do a reset and give your old financial resolutions new meaning.
Downloading an App or Two to Stalk Your Spending and Saving
If you can’t figure out why your financial plan isn’t working, an app can help you see where your money is really going—and possibly what expenses you can cut.
You can download a budgeting app and link it to your credit and debit cards, or get a mobile banking app that’s set up to follow your spending, saving, and investing accounts, like SoFi Relay.
Making Your Money Work Harder
Make your money work harder for you with an account that offers accessibility, flexibility, and competitive interest. Yes, it’s convenient to have all your money in one place and accessible 24/7, but if you’re letting your money sit in a basic checking account, you’re missing out.
Even if you have an interest-bearing checking account, it probably isn’t giving you much of a boost. Checking accounts are built to hold your funds for the short-term—it’s the money you use to pay your bills and grab some cash. Savings accounts are meant to hold onto your funds long-term, so they pay interest—but they can have limitations, including withdrawal restrictions and minimum balance fees.
Tackling Debt Head-On
There are three popular schools of thought on getting rid of debt. One is “snowflaking”: paying whatever you can manage beyond your monthly payment to slowly knock down your debt.
Another is “snowballing”: finding the debt with the lowest balance, paying it off, then moving on to the next lowest, and so on. Finally, there’s “avalanching”: choosing the debt with the highest interest rate, paying it off first, then going to the next, and the next.
The avalanche method may save you money in the long run, but you may find the other two may be more motivating.
Ending the FOMO Comparisons
Have you given much thought to the link between FOMO and your finances? If you’re spending hours on Facebook, Instagram, and other social media sites, it can be tough not to feel as though you deserve a more fabulous life with a bigger house, designer clothes, glamorous vacations, and expensive dinners out.
But if you’re trying to compete with what your “friends” are doing—and spending—it could be taking a toll on your budget. In a 2018 Credit Karma survey, 39% of the Millennial respondents said they spent money they didn’t have to keep up with their friends. In the same survey, 36% of respondents said they doubted they could keep up with their friends for another year without going into debt.
President Theodore Roosevelt once called comparison “the thief of joy” ; it also could be the thief of your savings. So be aware of your triggers and consider avoiding situations that might make you feel discontented with your life. A high-end shopping mall, for example. Or the circle of moms at the neighborhood barbecue commiserating about pricey elite summer camps.
Rivalry can be motivating, but you shouldn’t have to buy your status. When temptation strikes, maybe make a list (mentally or on paper) of all the great things you have planned for the year ahead. Are there trade-offs you want to make? If not, embrace JOMO (the joy of missing out), and just say no to the expense.
Automating Your Bills—and Your Savings
If you have plenty of money but frequently find payments are past due, it could be that you simply don’t have the time to sit down and work through a big pile of bills every month.
You could consider automating monthly payments for your utilities, housing, car, car insurance, and more. When you pay your bills consistently on time, you’ll likely avoid late fees and the threat of higher interest rates.
And once you’ve paid your bills, it may be time to think about paying yourself. Whether you’re adding to a basic savings account, a hybrid account, your investment savings, or all three, automated savings deposits can save you time and help you grow your money little by little.
Going On a Spending Diet
Diets are always a big deal at the New Year, and this year was no exception, with the keto diet and Jennifer Lopez and Alex Rodriguez’s 10-day no-sugar, no-carb challenge leading the pack. Why not think of spending in the same way?
In her book The 21-Day Financial Fast: Your Path to Financial Peace and Freedom, financial advisor and Washington Post columnist Michelle Singletary outlines some short-term challenges (just 21 days) that could help build better habits for long-term success.
Her basics include purchasing only what you need; paying with cash only; and keeping a log of your spending, saving, and struggles. If that feels like a bit too much to handle, you could pick just one goal to focus on and go for it.
Don’t Beat Yourself Up for Backsliding
The key to success with any New Year’s resolution is to keep on it. Even if you backslide, you can always start over. And you don’t have to wait for a new year to begin again. Any day will do—whether it’s your birthday, the 4th of July, or just an average Monday.
Don’t beat yourself up if you’re behind on your goals. Instead, put your focus on ending the year in a better place financially than where you started.
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