A lot of people make money resolutions. According to study after study, the most popular resolution every year is to lose weight, followed by getting organized and then saving more money. It’s good to see that a financial-related resolution is in the top three. Here’s a framework for making that New Year’s Resolution stick.
Many Americans are still trying to dig out of the hole after the 2008-2009 financial crisis. Some of us are feeling like we missed the bull market over the past 10+ years, and might take on too much risk in an effort to catch up. No matter your past investing history, there is always more we can do to better the financial picture for ourselves and our families.
The key is to make a plan. Sadly, some don’t bother making a New Year’s Resolution because it seems futile. Indeed, few of us are able to keep what we resolve each year. Did you know that while the majority of us make resolutions every year, less than 8% actually keep them? This doesn’t have to be the case. There is reason to make next year your year to accomplish what you set out to do.
Here are some tips to help:
- Get your family involved to help you through. You can also share your resolutions with others and have someone keep you accountable.
- The centerpiece for a financial resolution is to create a budget for the entire year. This isn’t as daunting as it sounds… Decide with your partner and family members what the big expenses are for next year — will you need to buy a new car? Take a vacation? Fix the roof? Or replace the air conditioner? By planning ahead and setting aside money in advance, these expenses don’t hit your pocketbook as hard as they would if there were no plan. A family budget is a great learning opportunity for kids as well.
- Don’t allow mistakes you made in the last 12 months to affect your goals for the coming year. Allow yourself to mentally wipe the plate clean. Use previous stumbling blocks as your new goals for next year.
- Don’t forget to write down what you want to achieve and place it somewhere you see it each day. If nothing reminds you of your goals, then it becomes much more challenging to attain them.
Finally, talk to your financial advisor to make sure your resolutions are consistent with your long-term financial plan. Your financial advisor can be a great accountability partner too.
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