It’s that time of year when everyone is thinking of change. A new year comes with new goals. Or as most people call them: resolutions. All of the sudden, your social media is flooded with posts from your friends talking about losing weight, saving more, being kinder. Hashtags like #NewYearNewMe, #Resolutions, #MakeAChange, and #ThisIsMyYear are trending all over the place. But what is the reality of actually making and keeping a resolution?
The Reality of the Situation
There was a study from the University of Scranton that said about 25 percent of New Year’s resolutions fail in the first week. Another third don’t last a month, and only 8 percent actually make it all year long. Gym owners know all about those percentages.
Did you know more people join a gym in January than in any other month? The average cost is about $500 a year, but most of them drop out. In fact, gym owners count on it. They way oversell memberships because they know only about one in six will really use them. Talk about a bad investment for you and a great investment for gym owners!
Well, just like resolutions to lose weight, read more, or even be nicer, all seem to fall by the wayside, so do resolutions about saving money or getting out of debt. And just like those other resolutions work best when you have a professional helping you, so too does any goal in the financial arena. That’s why I’m here! To give you some hope and “financial training” and to help your budget and retirement get into shape! I’m going to give you three basic steps to get you started on making and KEEPING your financial resolutions for this year.
Step 1: Create a Budget
You really can’t know what kind of physical shape you’re in without some sort of test or evaluation. The same is true with your financial fitness. How do you know where you can trim some fat? Where do you come up with the number of how much you’re going to save? What should be your first priorities with your money?
You can’t answer any of those questions without first taking a realistic look at what you are currently doing with your money. Most people hear this and think of a monumental task! But stick with me. We have a simple set of tools to help you accomplish this. I’ve provided them at the end of this post or you can click on our “Resources” page.
For the Weekly Expense Tracker, you will want to print out the last four weeks of your bank transactions or use your latest monthly statement. Add up all the expenses in each category, then fill in the worksheet. This should give you an idea of how much you spend monthly.
After you have determined how much you spend monthly, revisit theWeekly Expense Tracker. Then use the Expense Self-Evaluation Tool to determine if you feel that you spend too little, too much, or just enough in each category. In the categories where you feel you spend too much, determine how you can cut back to save money or reallocate it to pay off other debts.
There! Step one is done! You’ve just created a budget! In the process, you’ve hopefully found some extra money. The most common place to find extra money is on subscription services you’re not using. Cancel them! Especially if it was because your kid subscribed to a monthly app payment that you didn’t know about. Another common place is on dining out or even daily “small” charges like coffee, sodas, and snacks. Small charges, added up over time, lead to large expenses. Just like small deposits, added up over time, lead to significant savings!
Step 2: Make an Educated Plan
Now that we are past step one and we’ve found an extra $25, $50, or even $100 a month, what do we do with it? This step also seems overwhelming since there seem to be a million differing opinions and a million different methods out there! Or so it seems. There are really just a handful of different paths and ways to save for our future or get out of debt. People have just branded them differently making it seem overwhelming.
So what should the average person do? Most of us can’t afford professional financial planners. And we wouldn’t really want one anyways since they don’t really teach us what to do with our money. They just tell us and hope their credentials will help us to say yes. That’s where what I do comes in.
Our company teaches – yes, teaches – average Americans like you and me about the different options out there – for FREE! Through our Financial Self-Reliance Workshop, we teach people about things like the dangers of debt and how taxes affect our savings and retirement plans. Then we go over safe savings options that protect our retirement from downturns in the market and still provide high growth interest rates, like Indexed Accounts. Finally, we cover how to protect our financial households from unexpected life events like chronic illnesses, critical illnesses, and terminal illnesses.
Then, we sit back, let you ask the questions during one on one follow up sessions – that are also free – and help you to understand the decisions you’re making with your money. We truly provide an education for the average American because we believe that people make great decisions when they are properly educated. We have these workshops multiple times per week virtually, so be sure to check our calendar to find a time that’s good for you and get your private link.
Step 3: Automate!
I think the heading says it all, but in case it’s not clear, set your savings habit on automatic. THIS IS THE SINGLE MOST IMPORTANT STEP TO MAKE YOUR RESOLUTIONS STICK! Whether you are transferring your money to a simple savings account, putting it in a 401(k), or saving it in an Indexed Account, let the computer do the work for you. People who plan on making this transfer or deposit manually rarely stick to it. The ease of just spending the money instead is too tempting.
Yes, the first month it might sting a little, but the sting will be less and less until about month four or five when you’re not even missing that money that’s taken out of your check or account. You won’t even think about that money as being “gone”. The sting will be replaced with the excitement of watching it grow! Whatever company you choose or whatever plan you go with, make sure it has an automatic transfer/deposit option.
There’s a Great Start to a Great New Year!
Well, this should get you off to a great start this year. Following these steps, especially step three, should help you be one of the 8% who make it over the hump and sticks to their resolution. Now, as far as helping you lose weight this year, you’ll have to find a different kind of professional for that!
Free Resources
Don’t forget to download our free budgeting tools; the Weekly Expense Tracker and the Expense Self-Evaluation Tool. Also, feel free to register for our FREE Financial Self-Reliance Workshop and to Subscribe to our blog for more great free information, education, and resources.
