For those of us who make a New Year’s resolution, you know the struggle in seeing it through. Every year brings its own personal goals and challenges that we vow to resolve in the New Year. Whether we pledge to lose weight, buy a house or develop closer relationships with family, New Year’s resolutions run the gamut and are as unique as you make them.
One resolution that has little to do with fitness or being healthy that we see year after year is the pledge to be better with money. Yes, yearly financial resolutions are popular for those who need that extra push to take control over their finances, even those who have been successfully managing their money for decades. After all, who doesn’t want to take the steps to improve financial health?
According to Fidelity Investments, nearly 1/3 of Americans make a financial resolution. Common, yes, but unattainable, definitely not. In their research, they found that half of resolution-setters achieved 80% or more of their financial goal. The beauty of financial resolutions is that it can be as general (“save more money”) or as specific (“pay down 50% of student loans”) as you want. Highly objective, there is little gray area in a financial resolution—if you set it right.
Here we’ll uncover some very realistic, everyday goals that can help you get closer to financial freedom without breaking the bank—or your sanity.
- Ramp up your savings strategy—with caution. The problem with most savings-based resolutions is they’re too ambitious to work long term. Take baby steps. Choose how much you want to bump up your monthly savings ($10, $25, $50, etc.) and test it out for a few months to see how your budget fairs with the reduced funds. Once you find the right amount, you’ll realize you don’t miss the money at all, but that your savings account yearns for it every month.
- Bring your coffee, pack your lunch. Based on data from a Workonomix survey by Accounting Principals, 50% of the American workforce spends approximately $1,000 per year on coffee and 66% buy their lunch amounting to nearly $2,000 a year. Make it quantifiable—instead of saying you can’t buy coffee or lunch, limit it to once a week and you’ll see the savings add up (and your caloric intake go down!).
- Remove bottled water from your budget, entirely. Depending on your habits, this might be tough, but luckily there are easy, inexpensive ways to get around it. Consider the $2 you spend every time you pick up a bottle of water to carry around—that really adds up to an unnecessary amount of money. Instead, invest in a reusable bottle and you’ll see your savings or emergency fund add up without much effort at all.
- Splurge-to-save. Try spending your money where it really matters as much as possible. Instead of buying the most value-friendly option every time, try choosing a higher quality version that will last. The idea is that you’ll shop less frequently because you buy higher quality and view that purchase as a long-term investment. Try cutting out mindless shopping and “fast fashion” brands. Quickly, you’ll realize that the money you’re saving from not buying here and there will allow you to purchase a better-quality, longer-lasting item.
- Walk more, drive less. Easier said than done unless you live in a walkable city. However, if you spend money every month on cabs, Uber or gas, there are certainly ways you can cut back on the short driving trips. Coordinate a carpool with friends or co-workers. If this isn’t possible, there are surely other ways to reduce your driving. How about eliminating the 10 minute drive to the café for that latte to make a cup of coffee at home?
Don’t get stuck in the “save more, spend less” box
Set the bar too high, and you’ll just end up feeling guilty and defeated. The mentality of spending less to save more oftentimes fails before we get the chance to see if our attempts are partially successful. While it’s great to say you want to pay 50% of your debts, use less credit or save for retirement this year, those are upper level goals that you won’t come close to without smaller steps along the way. Choosing one or several small, realistic resolutions will help you see how the little things add up like driving, buying lunch, or choosing cheap over quality.