As we start the New Year, for many it's time to make some resolutions. Although resolutions can be notoriously tricky to keep, financial resolutions are some of the hardest. Keeping track of a spending plan for the year can be an arduous process. Here are six money resolution mistakes to avoid in the New Year.
- Goals not specific enough. This isn’t just with financial goals, but all goals. Avoid goals like, “I want to save money this year.” Instead say, “I want to put $100 into my savings account at the credit union by the 15th of the month.” The more specific you can be, the easier it is to stick with, stay motivated and track your progress.
- Timelines not set. Make sure you know when you want your goals to be achieved. Unless you set a specific date, you never know when you arrived. Such as, “My Visa credit card balance will be paid off completely by July 1st.” This will help track your progress, provide interim milestones and stay motivated.
- Too many goals. It can be daunting facing the New Year with more goals then you have money. Start with a few simple goals that you really want to achieve and make those your priority.
- Not prepared for the unexpected. As in life, stuff happens! Don’t let the setbacks get you discouraged from your goals. Every bit of progress towards a goal is still progress. If you can only put $20 a month towards savings, instead of $100, direct the $20 and keep going! Everything helps and small steps are better than no steps toward your goal!
- Keeping your goals to yourself. Share your goals with your friends and family. Part of the New Year’s resolution tradition in my house is to share our resolutions around the dinner table on New Year’s Eve. This allows others to help you stay on track. By having family or friends check in on your progress, helps you stay motivated and accountable. It takes a team!
- Not focusing on debt reduction. Debt reduction should be a top priority. Getting out of debt, builds your self-reliance and frees up money to direct to other things, such as saving more! The sooner you pay off your debt, the more financial freedom you will have. If the debt is too large to be paid off in a year, set incrementental milestones. Remove the credit card from your wallet and begin a cash/debit payment system. If you are having trouble making a payment, pay the minimum balance due. Never ignore the due date of a payment.
Most importantly, the New Year is for renewal. Be kind to yourself and make it fun. Get a tribe to keep you accountable and track your progress. By making financial resolutions, you set yourself on a path to financial security, independence and freedom.
Now that’s a goal worth setting!