Are you committing to financial resolutions this upcoming year?
You can take comfort in knowing you’re not the only one who has financial resolutions for 2016. In fact, a study performed by Fidelity Investments found that they are the most common type of New Year’s self-improvement plans! Not to mention, those focusing on their finances have achieved 29% success rate compared to 12% health and fitness success rate. So if you want real results this coming year – get your money matters organized now!
Aspiring to be part of the 29% that commit and stick to their goals for an entire year? To attain financial success in 2016, it’s essential that you grasp your connection with money. Commence by taking a step back and assessing your current relationship with finances.
1. What are your financial goals this year?
As we enter the new year, it’s time to evaluate your ambitions and objectives. To ensure that you reach these goals, make sure that your financial plan is up-to-date and designed for success!
Whether you’re setting aside funds for a once-in-a-lifetime getaway or merely putting away money to secure your future, the savings goals of last year are likely different than those of this. Perhaps now you find yourself budgeting carefully as you strive towards securing a down payment on a house while edging closer and closer to retirement age.
Establishing clear goals is the key to staying motivated. Set specific targets, such as “I want to add $6,000 to my emergency fund” instead of something vague like “I want to save money.” Once you’ve determined your financial objectives, it’s easy for you develop a budget and spending plan that will help you achieve them.
2. What are your personal priorities for 2016?
Financial objectives shouldn’t be the only factor you consider when crafting your budget. A multitude of other elements should also influence it.
Do you prioritize spending quality time with friends and family? Allocate an entertaining budget to accommodate high-spirited activities like restaurants, movies, or weekend getaways. Are arts and culture important values of yours? Incorporate a seasonal subscription to a prominent theatre or orchestra in your financial plan. Do specific causes hold special meaning for you? Consider making consistent donations on the regular by allocating funds into your monthly allowance specifically for charity!
It’s easy to prioritize money over other aspects of life, especially when it comes to budgeting. Nonetheless, don’t forget that your financial goals should not be the only factor in deciding how you spend. Give yourself permission to let your personal priorities influence your spending choices; this will lead you to have a much more rewarding and satisfying experience with finances while still enabling you adhere tightly to the budget that was set for yourself!
[Related: 10 Millennial Spending Confessions You Can Definitely Relate To]
3. Where did you slip last year?
As we enter the new year, it is a great opportunity to reflect on what worked and didn’t last year – including where you fell short of your budget. Now presents an opportune moment to review your spending habits and find better ways to manage them moving forward.
Are you guilty of overindulging at restaurants in 2015? Did your retirement savings fall short of the amount you hoped to save? Were impulse buys a common occurrence for you last year?
If you want to make strides this year, it’s vital that you look back on the past twelve months and pinpoint your economic slip-ups. After doing so, put together a plan of action to ensure those same errors don’t happen again in 2016. That way, you can improve both financially and personally!
To ensure successful savings and retirement accounts, automating your money is essential. In addition to this, controlling spending habits will be a must for long-term success. After you have identified the areas in need of improvement, it’ll be much simpler to put those solutions into action!
[Related: 5 New Year’s Resolutions You Won’t Keep]
4. What are your mandatory expenses?
Now that you’ve identified your objectives, top priorities, and shortfalls in resources, it’s time to develop a budget for yourself.
To begin, pinpoint the expenses you must pay each month. These will include your rent or mortgage, insurance bills, utilities and debt payments to name a few. Make sure that these costs are factored into your budget first before subtracting them from your income after taxes. The remainder of what’s left can be allocated for variable expenditures!
5. How much can you save each month?
After calculating your necessary expenses, it’s time to look into savings. Think about long-term objectives like retirement and short-term goals such as a vacation that you would love to take this year. List all the items you wish to save up for and rank them based on their significance.
To reach your long-term goals like retirement, save every month. For short-term objectives such as travel or larger costs, allocate a fix amount of money towards each individual goal until completed. Once one is hit, shift the focus and resources to the next end target on your list.
When you have established the amount of money that you’d like to contribute to each goal, the best way to remain committed is by making saving obligatory. Set up a direct transfer from your paycheck or checking account so your savings will never be at risk for accidental spending and always moving in an upward trajectory! Making automatic monthly deposits into your savings helps ensure progress towards financial stability.
[Related: Bust These 5 Bad Excuses for Not Saving]
6. What are your spending triggers?
If you wish to take control of your finances, it’s essential not just to cut back on spending but also recognize and address the underlying causes. Trimming small costs like insurance bills or credit card interest can help, as might eating out less often. But all those changes will be for naught if you don’t identify what triggers such unnecessary expenses in the first place.
To help reduce your spending, it’s important to pinpoint the triggers that lead you to break your budget and ignore financial plans. Taking a few moments to recognize these cues and formulating an actionable approach will put you on track towards reducing expenses in the long run.
If you feel the urge to use a coupon code when it appears in your email, then unsubscribe from promotional emails immediately. Instead of grabbing takeout every time you’re feeling overwhelmed, establish an enjoyable and free way to de-stress after work. Do you find yourself going overboard with spending when out shopping with friends? Think about other activities that don’t involve splurging money, and make sure to leave your wallet at home if necessary.
When you pinpoint your spending triggers and devise strategies to stay away from them, it’s simpler to keep within your budget.
[Related: Binge Spending: Why Money and Alcohol Don’t Mix]
7. Where does your budget have wiggle room?
Fiscal management is incredible, and cutting your expenses to amass more savings is a splendid goal. However, if you adhere strictly to a budget with no wiggle room for slips or discretionary purchases, you can quickly get “budget burnout,” resulting in the relapse of poor practices.
To make it more bearable, identify the areas where you can provide yourself some reprieve. Perhaps no eating out but splurging on a latte once or twice each week is okay. Maybe canceling cable should be your goal while sharing a Netflix membership with someone else? By allotting room for several inexpensive luxuries and keeping sight of your major financial aspirations, achieving them won’t feel so restrictive!
Lastly, having a bit of spare money also implies making preparations for unforeseen events. Of course it appears prudent to put every penny you have into savings and retirement plans; but what if your vehicle breaks down one day with no cash available for the fix? Allowing yourself some breathing space in these kinds of emergencies will not only help you start budgeting correctly, but maintain it too!
[Related: 3 New Year’s Resolutions You Can Actually Stick To]
As the new year begins, it is an opportune time to organize your finances and create a realistic plan for achieving financial stability in 2016. Honesty and realism are key when setting objectives; with these traits you can be on your path towards monetary success.
This article was originally published on GOGIRL Finance.