Do you feel like the year flashed before your eyes or crept by slowly?
Oddly it feels like both somehow.
But as this year draws to a close, have you been thinking about what your resolutions will be?
Many people begin to make the regular resolutions of losing weight, eating healthier, exercising, getting a new job, or even quit smoking.
If you’re looking to make a resolution that has benefits all the way around, a resolution to improve your finances may be the way to go.
The first thing to consider is...
Consider What Your Specific Financial Goals Are
This part is important. If you don’t have a specific idea in your head on what you want to accomplish, a broad idea will make it harder to meet that goal.
For example, if your resolution was simply to save money, then you could simply save a bit more than you did before and meet your goal.
You don’t want to give yourself the room to get by on those resolution technicalities.
So as we go through the list we can talk about the broad topic and then some ideas to narrow that down.
Save More
Let’s start with saving more money.
We all want to squirrel away more money throughout the year and, for the most part, many start off doing well.
But then come the late nights from work where we don’t want to cook so we just eat out. Maybe the newest technology just came out and we just had to have it. That shopping trip for just one thing turned into much more…
If you have a specific idea on where you are making your financial savings mistakes, you can make more specific goals.
So let’s say you only eat out once per week or set aside a particular amount you can use each week for eating out and once that’s met, you’re done for the week.
Maybe your goal will be to only spend x amount on entertainment if that’s where your weak spot is.
Maybe you have “no-spend days or weekends” where you don’t spend money on anything non-essential i.e. gas, bills, toilet paper, etc. You eat from what’s already at home.
Maybe you literally have a jar or one of those 5-gallon blue water jugs where you put the money you saved so you can physically see the money you saved.
Have a specific idea on how you want to save the money so it’s easier to keep a targeted approach to that goal.
Improve Your Credit Score
We all know how important keeping that credit score in the green is.
One goal you can have for the previous resolution of saving money is to use a portion to make extra payments on your credit cards to get that score up.
You can make a specific plan for how much you want to put into your credit cards. Let’s say for example for every $100 you save, 25% ($25) goes towards paying off a credit card.
If you are in credit card debt and really want to improve that score, find a specific idea on how to do that. Making the minimum payment isn’t going to get you there quickly.
Maybe try using a weakness to help your credit score. If you spend $10 on fast food which may be your weakness, $10 has to go towards a credit card immediately.
Create a Personal Budget
If you don’t already have a budget, you really should make one. If you have one you haven’t been following through with, this year is the year to make that happen.
Budgets are very helpful in keeping track of the money you spend. Yes your bank will tell you what you spent where, but a budget involves actually inputting all your purchases and, if you spend a lot on tiny things, it adds up!
Generally when you first start a budget you may go over. It takes some trial and error. Initially, it will help you see where you are having problems with spending. Eventually you can figure out how much you can truly afford to spend on bills, entertainment, credit cards, groceries, and if you’re spending more than you really have.
A budget works to help you see, “oh I went over on entertainment, now I can’t make that extra credit card payment” or “now I have less for groceries”.
There are even apps like Mint, YNAB (You need a budget), and Personal Guard to help you with your budget!
Don’t Open Any New Credit Cards
A good idea for 2021 would be not add any new credit cards to your list!
Stores will really try to get you to get that store card to save a bit that day, but that amount you save isn’t worth the amount you save yourself by not getting the credit card.
You may save $5 that day, get a new credit card with the store, pass by the store a couple weeks later, spend $100, your bill comes and you pay the minimum $25, and now you have interest on that $100 that could end up being more than you even saved in the first place!
Increase Your Retirement Contribution
If you have a 401k retirement account, consider raising your contribution.
Even if it’s only a little bit, if your employer is matching it, consider raising that contribution to squirrel away more this coming year than you have in the past.
Other plans that are not 401k plans such as IRA have different rules so consider how you can increase those contributions over 2021 to add to that sweet sweet retirement!
Final Thoughts
Whatever your financial goals are, try to be as specific as possible.
Make a note and stick it on the fridge, bathroom mirror, or even change your phone background.
If you really want to buckle down on your finances and be successful in your resolutions, take the time to sit down and brainstorm what you think your issues are and how they can be improved.
Make a real plan that is attainable but still has you working hard to meet the goals! You can do it and make 2021 your year!
Have a financial resolution we didn’t cover here? I’d love to hear yours! Email me at dave@daviddenniston.com!
Material discussed is meant to provide general information and it is not to be construed as specific investment, tax, or legal advice. Individual needs vary & require consideration of your unique objectives & financial situation. Please consult with your accountant or tax advisor for specific guidance.