5 Financial Resolutions You Can Actually Keep

by Vered DeLeeuw · 3 comments

Did you know that most New Year’s Resolutions are eventually broken? Some experts say that it just doesn’t make sense to make them – you end up disappointing yourself. But I still think New Year’s, or the beginning of each year, is a good time to reflect on the past and decide on things to do differently in the future.

The key is to avoid vague resolutions or impossible goals and instead decide on a set of very specific, doable steps. For example, don’t say, “In 2011 I’ll get out of debt!” – It makes just as much sense as saying, “In 2011 I will lose weight.” Just as you need to break the “lose weight” resolution into small, manageable steps, you need to do the same when it comes to financial resolutions, and outline a detailed plan for how exactly you will achieve your financial goals for 2011.

Need ideas? Here are a few financial New Year’s resolutions to consider:

1. I will create a monthly budget

Preparing a budget isn’t difficult – it just takes time. It will probably take you about 2 hours, and this will be time well spent. Having a budget and sticking with it is one of the most important ways to improve your finances and to avoid unnecessary debt. It forces you to see the bigger picture of your finances, and to view single purchases in the context of that bigger picture.

2. I will save more aggressively

This is actually part of planning a budget, but it’s important enough to justify a separate resolution. Finding places where you can cut costs and saving more aggressively will enable you to repay any debt you might have faster and to build an emergency fund. When you go through the process of planning a budget, finding those expenses that you make out of habit but that you can live without is an extremely important step. In my case it was recreational online shopping. When I took a long, hard look at my financial behavior, I realized that I was in the habit of visiting my favorite online fashion store almost DAILY, even though I obviously didn’t need to buy new clothes that often.

3. I will keep paying off credit card balances aggressively and get closer to my goal of eliminating credit card debt

We all know that credit card debt is bad debt. The interest rate on a typical credit card balance is so high that it’s very difficult to pay down this debt, especially if only making the minimum payment. In fact, just making minimum payments can make even a small balance take years to pay off, at a cost of thousands of dollars in finance charges. Use these handy tips to pay off debt more quickly , and these tips to stay out of debt.

4. I will start an emergency fund

Should you pay off credit card debt first and then create an emergency fund? Experts are divided on this one. Here at Money Ning we feel that paying off credit card debt should be your first priority.  If you don’t have credit card debt, or once it is paid off, it’s time to start saving for an emergency fund. Try to have at least 6 months’ worth of living expenses in your emergency fund. Yes, it will take time to save that much, but the sooner you start, the sooner you’ll get there.

Having an emergency fund will help you avoid resorting to using credit cards and incurring new credit card debt if you ever stumble into difficult times, lose your job or incur an unexpected major expense.

5. I will invest in my 401(k) plan, if one is available to me, up to the employer match

If you’re employed and your employer offers a 401(k) retirement plan that includes an employer match, not taking advantage of the match is like turning down free money! If you’re not doing so already, resolve to take full advantage of the employer match – and of the tax benefits that employee sponsored retirement plans offer, including the ability to invest pre-tax dollars, and the tax deferral which enables your money to grow tax free until it’s time to start withdrawals.

Will you share your point of view? Do you believe in making New Year’s resolutions, financial or otherwise? If you do, what is your main New Year resolution for 2011?

Money Saving Tip: An incredibly effective way to save more is to reduce your monthly Internet and TV costs. Click here for the current AT&T DSL and U-VERSE promotion codes and promos and see if you can save more money every month from now on.

Related Posts

{ 3 comments… read them below or add one }

KM January 20, 2011 at 3:38 pm

I think New Year’s resolutions are a lot of pressure for people. They may feel as though they are required to make resolutions, so they break them because it’s not important to them. I don’t believe in resolutions – instead, I opt to make the necessary changes as soon as I realize the need for them. And don’t wait until the end of the year to change your life for the better because chances are, you will lose interest. Do it now, tomorrow, next week, whatever, but don’t try to conform to a tradition that bypasses your own personal will. Like you said, breaking it down into steps is a good idea. Just do it because you want to, not because everyone else is.

Reply

liju philip January 20, 2011 at 4:59 pm

I have been working on points 1,2 and 4 for almost 5 years now and the corpus has been healthy. As for credit cards, i used them only when i want to buy something that i have budgeted for already. I pay thru credit card only for points collection or for the money that i get back when purchasing.

Reply

Josh January 20, 2011 at 10:25 pm

It’s easy to make goals but it’s hard to keep them.

It’s about having a daily checkup. Looking at your goals, setting new goals, and adapting to your situations. That is how you win.

Reply

Leave a Comment