So many of us set our goals for the coming year with the best intentions and then feel the frustration of failure as the year wears on. The key to making meaningful resolutions that you can keep is specificity. Broad goals that can’t be quantified and tracked are pipe dreams. Success comes from planning tangible and measurable changes in your finances.
Recently U.S. News & World Report put out a list of “The 5 Best and Worst Financial New Year’s Resolutions“. As the article says, “Setting vague goals won’t help you save more or spend less.” However, taking specific steps to better financial health will allow you to track and take pride in real progress, one small but significant step at a time.
Here are some examples from the article of the best and worst financial resolutions:
Worst Resolution No. 1: Pay off debt.
Best Resolution No. 1: Pay off $150 of debt each month, or $1,800 over the year.
Notice that the “best” goal includes a specific dollar amount and end date. The article also advises “make sure the goal meshes with your current financial situation. In other words, if you’re barely making ends meet, don’t resolve to pay off $20,000 in debt over the course of the year. That’s not achievable or realistic!”
Worst Resolution No. 2: Make more money.
Best Resolution No. 2: Send out five résumés per month until I get a higher-paying job.
“Make more money” is way too vague a goal to be effective. Instead, come up with specific action items that are likely to lead to making more money, like asking for a raise, sending out a specific number of résumés, setting up searches on job listing websites, or attending a certain number of job fairs.
If your job is in sales or if you have a sales business on the side, decide the the amount of commission that you want to make and work backwards from there. If you want to make $10K more in commission, how much in sales will that require? How many sales appointments will you need to close that amount of business? How many prospecting calls will you need to make to set up that many appointments? Now you have the formula and a specific, trackable goal: “In 2015 I will make 25 appointment setting calls per week.”
Worst Resolution No. 3: Spend less money.
Best Resolution No. 3: Cut $50 per month off the grocery bill.
The article recommends, “Before you resolve to spend less money, check your 2014 spending. Find any areas where you overspent, and then think of specific ways to cut spending in those categories in 2015. For instance, you may be able to save a ton on groceries just by planning meals ahead or shopping at a bulk store for some of your nonperishable items.”
Or maybe you can resolve to eat at home and pack a lunch 4 days a week rather than eating out. There are plenty of ways to save in our shopping habits, from cutting coupons to using free smartphone apps like ShopSavvy and RetailMeNot. If a penny saved is a penny earned, cutting your shopping expenses is the easiest way to give yourself a raise.
Worst Resolution No. 4: Save more money.
Best Resolution No. 4: Save $100 per month in my 401(k).
Retirement accounts like 401(k)s, annuities and IRAs are great tools for planning and sticking to your savings goals. You are never too young to meet with a trusted financial advisor and plan how much you will need to set aside for your retirement goals. Matter of fact, if you haven’t had that meeting yet or it has been a while, make scheduling that planning session your first financial New Year’s resolution.
Worst Resolution No. 5: Stick to a budget.
Best Resolution No. 5: Use Mint or You Need a Budget to track and control spending each month.
There are so many splendid (and free!) apps available to help you create and monitor your budget nowadays. Find the one that works for you and use it! Matter of Fact, U.S. News & World Report did a whole article on apps that help you keep your resolutions. So no excuses, you have all the tools that you need.
This can be the year that you set and achieve your goals for a better financial future. Remember, be specific, be realistic, and use the tools available to hold you to task.
Happy New Year and cheers to a prosperous 2015!