With the New Year approaching, take time to make a list of your financial resolutions. Financial resolutions can be especially difficult to stick with because, like eating nad exercising, our spending, savings and investing habits tend to be tied to our emotions more than our logic. Here are five steps for keeping your financial resolutions:
1. Form new habits by tying them to current behavior. If you have a regular system for paying bills, make a “bill” for your financial savings goals and pay it (by making a contribution to your retirement plan, college funding account, etc.) while you pay the other bills.
2. Put them on autopilot. One of the easiest ways to keep saving and investing goals is to set up automatic deposits or investments. Payroll deduction for 401(k) contributions or reimbursement accounts are great examples – you never have possession of the cash, so you don’t feel the pain of taking it out of your spending money. Contact your human resources department now about starting or increasing your contributions.
3. Make your resolutions achievable and realistic. Many people make resolutions without much planning or forethought – and fail the same way. If you are serious about your financial resolutions, do some homework, crunch some numbers and put your plan in writing.
4. Break them down into small steps. Trying to keep too many resolutions at once will leave you feeling overwhelmed. Instead of making or implementing resolutions for the whole year now, break them down and add one or two each quarter.
5. Work with an accountability partner or coach. Anyone who has tried to implement a weight loss or exercise plan knows that a buddy system increases the odds of success. If you need help sticking to your financial resolutions, we can work with you to create a plan for keeping your resolutions, whether they include college planning for your child or grandchild, or funding your retirement.
Call our office for an appointment to discuss your financial resolutions and how we can work together to make this a happy and prosperous new year!