This is the time of year when many of us begin to set our goals and resolutions for the next year. We start out the year with a good attitude and great intentions, but soon life gets in the way. Research out of the University of Scranton suggests only 8% of individuals complete their New Year’s resolutions. In my opinion, so many people struggle to accomplish their resolutions because they make resolutions that are either too vague and/or require constant action. So to increase your odds of completing your New Year’s resolutions, be specific and choose resolutions you can automate. (For related reading, see: Financial New Year's Resolutions You Can Keep.)
Below, I break down three typical finance-related New Year’s resolutions and provide alternatives that are much more manageable.
Typical Resolution: “Save More Money”
While saving more money is a good goal, it pays to be more specific. I would suggest something like this: "I am going to increase my 401(k) contribution by 2% in 2017” or “I am going to max out my Roth IRA in 2017 through automatic contributions." Both of these goals fit in the category of “Save More Money” and they are specific, able to be tracked, and automated. Think about it—once you increase your 401(k) contribution, you don’t have to make a conscious decision each paycheck to save more. It’s automatically done!
In fact, if you want to bail on your resolution you will need to make a conscious decision to reduce your contribution. The same is true for maxing out a Roth IRA contribution. Once you set up an auto-draft from your bank account, you need to make a conscious decision to cancel it. (For related reading, see: 10 Ways to Effectively Save for the Future.)
Typical Resolution: “Spend Less”
Again, being more specific will help significantly. I would suggest setting a specific limit on your spending. For example, you could say “I am going to spend no more than $4,000 a month in 2017.” In determining what your number should be, I would suggest you start with determining how much you are currently spending. The best way to do that is to figure out what your take-home income is and subtract any additional savings (IRA contributions, increasing emergency fund, etc.) from that. This should give you an amount very close to what you are spending. If you are like most, you will be surprised at how high this number is and wonder how you are spending so much.
An alternative way of determining what you are spending each month is to go back through your credit card and bank statements and itemize your expenses. If you are a detail-oriented person and enjoy this type of process, you will be hard-pressed to find a more accurate strategy. Most, however, will find this tedious and will have trouble following through.
Of course, your goal should be a number lower than your current amount. Once you determine your resolution number, I suggest you apply the Dave Ramsey concept of “pay yourself first.” Paying yourself first is when you automatically save a specific amount at the beginning of each month and you live on what is left over. The amount you save at the beginning of each month should go into a separate account that is harder for you to get to. Ideally, you would not have a debit card or checkbook for this account. It may also make sense to make a resolution of attending a financial or budgeting course. (For related reading, see: The Basics of Financial Responsibility.)
Typical Resolution: “Pay Off Debt”
No surprise here. My recommendation is to be more specific and have an automated strategy. If you have a goal of reducing your debt by $5,000 in 2017, you will want to identify which of your loans has the highest interest rate. For example, you will want to focus on a credit card with a 25% interest rate before one with a 10% interest rate. Next, you will simply divide $5,000 by 12 months ($417/mo.) and call the loan company to have your automatic monthly payment increased by this amount. You no longer need to make a conscious decision to write an extra check each month. (For related reading, see: Expert Tips for Cutting Credit Card Debt.)
The Bottom Line
Although the principles in this article should be helpful to most, everybody’s situation is different. I would recommend seeking professional help from a financial planner, particularly if you are overwhelmed with your finances or uncertain about what to do. In fact, a good resolution would be to work with a financial planner and develop a plan for your future! (For more from this author, see: Top 3 Mistakes Retirees Make With Their Finances.)
cr. https://www.investopedia.com/advisor-network/articles/012017/3-realistic-financial-resolutions-2017/
ไม่มีความคิดเห็น:
แสดงความคิดเห็น