5 Tips for Setting New Years Spending Resolutions
The Christmas tree has been taken down, the champagne has been finished off, your guests have gone home and 2016 has arrived. For many people, the start of a new year is a reality check. You can certainly be forgiven for being reluctant to let go of the thrill and excitement of the holidays, but that excitement is no excuse to fall back into old, harmful financial habits. Why not make 2016 the year you finally get out of debt, or at least get on the path to achieving financial freedom? Here’s how you can get started:
- Set a budget. This probably seems like obvious advice, but successful entrepreneurs and multi-millionaires swear by it. Budgeting is important because, whether you’re struggling to pay your bills or you have money to spare, it helps ensure that you always have a little extra to dip into if times get tough.
Budgeting can seem overwhelming, but it doesn’t need to be complicated. Simply keeping track of how much you spend on groceries each week is a great starting point. If you find yourself scrambling to pay rent, it might be time to review your monthly expenses and see where you can cut back. One less night on the town? Dropping a few thousand channels from your cable subscription? (Does anyone actually use those?)
The key to successful budgeting is not to deprive yourself of every little luxury, but to find a balance that works for you. Since every individual and family’s financial situation is unique, it’s important to consider all the variables before jumping into a new budgeting system. What works for a friend or relative might not work for you.
- Get creative. The most successful people not only maintain a budget, but also seek out new ways to stay ahead of the curve. Managing your personal finances can be fun instead of frightening when you approach it with curiosity and enthusiasm.
For instance, if you have always dreamed of having enough money to take a vacation to an exotic location, 2016 could be the year you make it happen —not by gaining more income, necessarily, but by making the most of what you already have. Make it your goal to avoid accruing any additional debt, and establish some new and innovative ways of avoiding unnecessary spending.
Do you really need a $5 coffee every morning? Start brewing at home instead. Need to buy a new winter coat? Check the thrift store, or consider shopping online re-sale websites for deals instead. There are plenty of ways to cut back on expenses without denying yourself the happiness you deserve—not to mention, the satisfaction of knowing you’re saving money for a rainy day is a source of happiness all on its own. You may be skeptical now, but you’ll quickly begin to see the value – literally – of budgeting.
- Prioritize. No one who has managed to amass extreme wealth, or even enough income to live comfortably, got there through frivolous or impulsive spending. The most successful people are those who carefully and cautiously analyze the consequences of each dime they spend. They consider which luxuries are also priorities and cut back on the ones that really aren’t worth it.
One important thing to remember is that one small expense that may seem crucial to you may easily be dismissed by someone else—and vice versa. As mentioned previously, everyone’s financial situation is different, so the same advice won’t necessarily hold true for everyone.
For example, if you’re an animal lover, you might wish to adopt a new pet, while taking into account the cost care over its lifetime. Someone else might consider an annual family vacation to be a necessity, since it makes everyone happy. Carefully consider what’s important to you and your loved ones, and budget accordingly.
- Pay yourself first. This is a great tip for anyone just beginning to understand personal finance. Paying yourself first does not mean buying yourself a reward after you receive your paycheck. On the contrary, it refers to earmarking percentage of your earnings for savings, where you won’t be able to touch it.
People who put money away each month are often shocked at how quickly their savings begins to grow. Should unexpected medical expenses or a job loss occur in the future, you won’t be caught short. Studies have consistently shown that people with a savings account are much happier and feel less stressed during their daily life.
- Commit to paying back debt. This is easier said than done, but the feeling of relief is better than you could imagine. We’ve worked with thousands of clients who were overwhelmed with debt and terrified that they would never make it out of their situation. Many of their lives were transformed as they began on the road to financial freedom.
Debt binds you, and makes it painfully difficult to plan for the future. Anyone who has owed a small amount of money to a friend understands the unease you experience until the debt is repaid. Make the commitment to get started on paying back your debt in 2016.
[Photo by: Jay Huang Photography]