Let’s face it, by the end of January plenty of people are already giving up their ambitious New Year’s resolutions. The Sunday morning workout routine gets replaced with brunch. The pact to read more leads to a stack of untouched books because Netflix released another must-watch original show. And the promise people make to save more, spend less and finally open up that retirement fund just gets pushed off until next year. Except failure, or a little hiccup, in financial planning shouldn’t mean money goals have to wait until the time the ball drops.
Often a failed resolution isn’t simply due to lack of willpower or ignorance. Instead, it’s often the result of lofty goal setting coupled with poor planning.
Those dedicated to making this year the best one financially can step it up whether it’s January or June by using an easy three-step plan.
1. Set actionable goals.
Generic goal making is New Year’s resolution kryptonite. Singing “Auld Lang Syne” while making a mental note to “save more” won’t help you actually tuck away thousands of dollars into an emergency fund or finally maximize that employer-matched 401(k). Instead, it’s best to set actionable goals — preferably ones with measurable time lines.
If you’re looking to save more this year you should decide for what the new savings account will be used. Is it to take a trip abroad? Is it for a down payment on a house or renovations on an existing home? Or is it to finally have an emergency fund with six months of living expenses? Once the reason for saving has been established as well as the amount needed, it becomes much easier to stay motivated because each penny saved is working toward a concrete goal.
The same strategy can be used for other goals such as paying down debt or learning how to invest. You must decide how much debt is going to be paid down by a certain time and then assess how to make it happen. If you’re interested in investing, you can start by reading up on the topic, picking a brokerage and then starting with index funds.
2. Push the reset button.
No matter if it’s Jan. 26 or Nov. 26, it might make sense to press the reset button on New Year’s resolutions.
It’s OK to start and fail over and over and over, particularly when it comes to money. People are not going to shift from racking up monthly overdraft charges to suddenly being Saver Susie.
Instead of feeling completely discouraged each time a financial hiccup derails a resolution, take a moment to hit the reset button. Evaluate what exactly went wrong and how it could be corrected in the future.
Perhaps overspending on credit cards is part of the problem. Then commit to switching over to a cash diet for a month and avoid swiping plastic. Or as an alternative, set an alert to pay off credit cards once a week so your checking accounts accurately reflect how much you’ve spent during the month.
Take time each month throughout the year to check in on financial goals and determine if they’re being met. Decide what can be changed to help achieve the goals or if perhaps they’ve been met already and can get tweaked or expanded.
3. Automate your savings and bills.
Once goals have been set — or refreshed — it’s time to put on cruise control. There are so many ways to automate financial transactions in order to reach goals.
Here are a few examples:
— Money going into savings should never hit a checking account. Instead, speak with payroll and set a percentage to go directly into savings so it never passes through a checking account.
— Keep increasing retirement contributions. Don’t just jump right into contributing 10 percent to a 401(k). Instead, start with 2 percent and then push it up 1 or 2 percent every other month until the final goal is reached.
— Automate credit card payments. Never miss a credit card payment again by scheduling the bill to be paid on time and in full each month. Just be sure the correct amount will always be in checking come that time of the month. Calendar alerts on a smartphone or computer are great ways to remind yourself to check a bank balance before a credit card payment goes through.
Getting the Most for Your Money
The final step is to audit financial products. Even the savviest of financial experts should take one day a year to ensure they are using the best savings account, checking account, credit card, insurance and any other product. It feels great to find money that can be redirected to other goals by shutting down expensive financial products or earning more interest with a better savings account.
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Why You’ve Probably Already Given Up on Your Financial New Year’s Resolution originally appeared on usnews.com
