Welcome to 2018! It is a brand new year and with it, a fresh start for those of us wanting to (finally) make some changes. Topping the list for many is the resolution to save more and spend less. But let’s be honest, if you are like most of use, your resolutions will be derailed by February and completely forgotten by March.
The trick to keeping your goals is to make the follow-through as easy and mindless as possible. Thankfully, when it comes to finances, there are several things you can do that do not require much ongoing effort.
Consider three helpful suggestions:
1.) “A goal without a plan is just a wish.”- Antoine de Saint-Exupéry.
When it comes to those financial resolutions, merely stating you will “save more”, or “spend less” leaves room for interpretation and even more room for missing the mark when it comes to reaching the goals. When you make a resolution, break it down into something that is both achievable and measurable. And track your progress! For example, instead of simply stating you want to “save more”, decide on a dollar amount that is reasonable within your budget. Tie it into a longer-term goal so you do not lose sight of why you are doing it in the first place. In the case of saving you can make it easy on yourself by setting up automatic transfers from your checking to your savings, or setting up automatic annual increases on the contributions into your 401(k).
2.) Be a savvy consumer. (i.e. Don’t spend more than you have to!)
When it comes to scaling back, try focusing first on changes that can save you money but will not dramatically impede your quality of life. Here are just a few ideas to get you started:
- Car Insurance - If it has been over two years since you compared prices of car insurance providers, then it is time to take another look.
- Cable - Consider much less expensive alternatives to cable such as Netflix, Amazon Prime Video or Hulu. This could save you over $100/month.
- Credit Cards with High Interest Rates - Call the credit card companies and ask them to lower your rate. This may or may not work, but it is worth the five- minute call to ask. Also consider obtaining a loan with a lower rate to pay off the credit cards.
- Uber Pool - If you are a frequent Uber user, try Uber Pool. It may take a few minutes longer to get to your destination, but you will get there for a fraction of the price.
3.) Pick your priorities wisely.
Between spending less, saving more and paying down debt, it is tough to know what to prioritize. But prioritizing the wrong way could cost you some serious cash over the long run. Consider these suggestions:
- When it comes to 401(k) contributions versus paying off debt, prioritize 401(k) contributions up to what the employer is matching. A dollar for dollar match is an immediate 100% return on your investment.
- Pay down debt with the highest interest rate first. Make the minimum payments on the others so that you can funnel most of your cash paying off the card that is costing you the most.
- Between your retirement plan and your kids’ college plans, pay yourself first! Kids have their entire lives to pay back student loans, but you cannot take a loan for your retirement. You can always help your kids pay off their loans later if you can afford it.
Remember, small changes now can have big effects later. So make your goals and then set yourself up for success by making the follow-through mindless. A year from now when 2018 is coming to a close, you will be able to look back and see how far you have come!