Don’t Just Make, But Keep Your Money Resolutions

Happy New YearMy wife and I haven’t made specific resolutions yet.  We do have some previously set debt reduction and savings goals that we are working on.  However, I would like to honor the new year by penning some specific resolutions.  Anyway, once we do this, I think it’s crucial to focus on maintenance of these goals.  I’ll quote Seinfeld, from the episode where he’s talking with the car rental lady about the lack of cars on the lot and the fact that he’d made a reservation:

“See, you know how to take the reservation, you just don’t know how to HOLD the reservation and that’s really the most important part of the reservation, the holding. Anybody can just take them.”

Ah, good times.  Ok, so I ran across this article from the Dallas Morning News that appears to shed some light on keeping to those resolutions.  According to writer Pamela Yip, “Whatever your goals are, how you lay them out and work toward them will determine whether you will succeed.”  Pamela lists nine of the most important things to make this year a financially successful year.  I present them here along with my own comments:

1. Make sure your goals are realistic.  Another way to say this is, “is the goal attainable?”  Can you get there from here?  If so, make it a goal.

2. Be specific about your goals.  Yes, this is the next element to any good goal…DETAILS!  If you want to achieve something, you need to know what specifically it is that you want to achieve.  Non-specific goal: I want to be rich.  Specific goal: I want to have a net worth of $50,000 by the end of 2008.  Specific and attainable goals can then be measured!  Also, it’s key to write down your goals and put them somewhere you will see them often.  On the fridge maybe?

3. Pay off or pay down your consumer debt.  Have any of this type of debt?  Well get on a mission to get rid of it.  Why?  It’s likely costing you (consumer debt averages around 20% interest…yikes!) and putting you at risk (the product you are in debt for is a consumer product…therefore, it’s being owe money for something that is worth less and less everyday)  See how I paid off my debt.

4. Start a savings program, no matter the amount you’re able to put away.  I’ve found that the best way to do this is to make it as automatic as possible.  Set up a payroll withdrawal (like direct deposit) into a savings account that will pay you some decent interest.  I put mine in Capital One 360!

5. Boost your retirement savings.  The best way to do this for most people is through their company 401k.  Most companies will even match a percentage of your contributions.  That’s why it’s important to do this steadily and to try and increase the amount contributed every year.  Click here for my experience with the 401k.

6. Develop a spending plan or budget.  This is what most people think of when it comes to new years money resolutions…budgets!  How exciting right?  Well, I think budgets are important, even if just to give you a sense of where you are spending your money.  Tracking your expenses can be an eye opening experience and can lead to better financial choices.  However, the key to budgeting for me is maintaining the durn thing.  Like health clubs, lots of folks use a budget in January in February, but how many people are still using that budget by August or even December.  I’ll be posting soon with some ways to make the budget process easier to maintain.  This is honestly what I’d hoped Pamela would have addressed with this article.

7. Check on whether you’ve covered your insurance needs.  Had a new baby?  Got married?  Paid off your car?  Own a home now?  Made any other big purchases?  If you answered yes to any of these questions, you may need to evaluate your insurance needs.  However, I think it’s a good thing to do this anyway at least once a year.  I saved a few bucks last year by spending 30 mins analyzing my auto insurance statement to see what I was actually paying for.  Better to be over-insured than under, so meet with an agent.  Most insurance agents will gladly sit with you to discover if you need more insurance…the onus is on you to tell them when enough is enough though.

8. Make day-by-day money resolutions.  Today, when I left home I decided I would eat my leftovers from yesterday’s lunch.  That was a conscious choice not to spend today.  Keep the bigger goals in mind, but use everyday to make the right choices…they’ll add up.

9. Don’t let an occasional setback discourage you from achieving your goals.  For most people I would expect this to be an unexpected medical bill, car accident, job loss, or other family emergency.  Life happens and we all must expect something to happen to bump us off track.  Just part of life, right?  But it’s your response to these situations that have the biggest impact on your long-term success.  It’s in these moments that you’ll need to be confident in your plan and press on towards achieving it.

Best of luck in the New Year!

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created this website back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.