We have an announcement: it’s time to start planning your 2022 finances. We know, we know. It’s probably not at the top of your to-do list, especially with the holidays right around the corner. But there’s no better time to add a few new year financial resolutions to your list.
No matter where you’re at on your financial journey, it’s never a bad idea to create some goals around your finances. But ineffective resolutions can sometimes backfire, leaving you feeling out of control and frustrated. But with the right tools and outlook, you can create realistic, achievable financial resolutions that you’ll stick to and thank yourself for making.
Create Realistic Financial Resolutions and a Plan to Help You Stick to Them
One of the biggest mistakes we see when people start making financial resolutions is creating unrealistic goals for their current financial situation.
While it’s great to set big goals, they require a lot of planning and strategic budgeting to achieve—and that’s assuming you even have a budget.
The truth is, the best way to set realistic financial resolutions is to know where you currently stand financially and create a plan to get where you want to be. So, before you start writing out your lofty goals, begin by evaluating your current financial situation.
Ask yourself:
- Do you already have a budget in place that you stick to?
- Is there any outstanding debt that could get in the way of financial security in the future?
- Do you have a safety fund to fall back on if times get tough?
Once you know your current financial status, create a plan for how you’re going to bridge the gap between your current situation and your resolution end goal.
It can be helpful to frame your resolutions with the SMART goal model. Come up with a resolution that’s simple, measurable, achievable, relevant, and time-bound. And, don’t forget to follow that goal-setting with a list of to-dos. That’ll help you turn plans into actions.
Create Goals Around Your Savings and Your Spending
Another helpful tip to make better New Year’s financial resolutions is to create saving goals and spending goals.
While it’s always a good idea to make saving money a priority, it’s also essential to use that money in ways that make you happy. According to financial planners, we sometimes struggle to stay on budget because of the negative connotations surrounding a budget and the idea that budgets mean you miss out on things. The same could be said for setting restrictive goals focused solely on saving.
So, if you want to limit your spending successfully, balance out restrictive goals by setting some that prioritize the things you get to do. For example, if you set a goal to cut out extensive coffee trips, balance it out by purchasing an inexpensive coffee machine to make gourmet drinks at home for less. These creative expenditures can save you money in the long run.
The key is to find a healthy balance between saving for the future and enjoying the present.
Set Milestones and Little Rewards to Keep You Motivated
Finally, the best way to ensure you’ll successfully skip the mid-January flop (when everyone else quits their resolutions) is to give yourself little reasons to celebrate along the way.
Creating better spending habits is all about the long game, which means it’s crucial to stick to your resolutions. And research shows that positive reinforcement is a great way to stay on track.
So, when you’re planning out your resolutions, think through a few milestones for your goal. For example, if you want to save $5,000 for a new bike, $2,000 and $4,000 would be ideal milestones.
Once you figure out your milestones, plan out a small reward to treat yourself at each milestone. These rewards don’t (and probably shouldn’t) be huge or expensive—they just need to be something that brings you a sense of satisfaction. A trip out for ice cream or a small purchase you’ve been eying for a while are both great motivators. Even better, try an experience like a short trip somewhere local that you love. A park picnic or a trip to your favorite shop downtown can create a robust and lasting sense of accomplishment and joy. These little milestones help your brain rewire savings to be a benefit, not a punishment, which helps encourage you to stick to your budget.
Get the Help You Need to Achieve Your Financial Resolutions from DEXSTA Federal Credit Union
There are tons of great suggestions for financial resolutions you can set in the new year. With these tips, you’re sure to nail your goals. But, if you’re struggling to get started or you’re not sure how to achieve your resolutions, our team of experts can offer helpful advice and resources.
As a member-owned, not-for-profit organization, we’re dedicated to helping our members get the tools and resources they need to achieve financial freedom. With reasonable rates on loans and benefit-rich checking and savings accounts, DEXSTA is here to help you create a brighter future for yourself and your family.