HOW TO ACHIEVE YOUR FINANCIAL NEW YEAR’S RESOLUTION
Friday, January 21, 2022
Getting in shape, eating healthier, and breaking bad habits. They’re all popular new year’s resolutions. But this year, thanks to the ongoing COVID-19 pandemic, improving our financial health is climbing closer to the top of the list.
The pandemic is taking a toll on our bank accounts. But there are ways to get back on track. Let this year be the year to rethink your spending habits, improve your budgeting and start saving!
Here are some tips to help you achieve your financial resolutions:
1. Start small with SMART goals
Improving your financial situation can be an overwhelming endeavor, so we recommend aiming for small improvements while setting SMART goals: specific, measurable, attainable, realistic and time sensitive. When you set goals that satisfy these conditions, you are more likely to achieve them.
Starting off with a short-term goal can also be a good way to start the new year with less pressure. Short-term goals are easier and faster to obtain. They also allow you to see your progress faster, which can lead to higher confidence and a greater chance of remaining committed to a long-term goal.
If you’re in need of a smaller and simpler financial goal this year, we recommend focusing on your monthly spending. Setting a monthly budget allows you to spend less than what you earn. Over time, a budget can help you cut back on discretionary spending or rely less on credit cards, leaving you with more cash at the end of every month.
Learning to live below your means is a small but smart way to save more money sooner and live debt-free. Ready to get started? Download a free copy of YNCU’s financial goals worksheet to start planning your goals today.
2. Pay yourself first
Want to see your savings grow faster this year? One of the best ways to prioritize savings is through automatic transfers.
“Pay yourself first” is a popular phrase in personal finance and retirement planning. It involves automatically deducting a fixed amount of money on a regular basis from your income or other money sources and depositing it directly into a savings account.
For example, if you no longer have to make regular car payments, we recommend diverting that money into a savings account. When something is automatic, we are less likely to treat it as an option and it becomes part of our regular saving and budgeting routine.
This system is an effective way to manage your spending habits and contribute to future expenses such as your retirement fund or emergency savings. Automatic transfers can be set up yourself, through online banking or we can help.
3. Focus on cutting down debt
It can be easy to go into debt, but it takes time and self-discipline to pay it off. Now that you know how to set SMART goals, we encourage you to use this tactic when it comes to paying down debts such as credit cards, lines of credit and student loans. This will make it easier to manage your income, you’ll avoid hefty interest down the line and you’ll have more freedom with your cash.
If you have outstanding balances on multiple credit cards, a realistic goal would be to pay down the card with the highest interest rate. Known as the “debt avalanche” method, this strategy involves making the minimum payment on all debts, then using the extra funds to pay off the debt with the highest interest rate. Another tip to consider is paying more than the minimum balance. This will help you eliminate debt sooner and decrease the amount of interest you owe.
If you’re still unsure where to start, reach out to your local YNCU advisor for guidance.
4. Introduce good financial habits
Be honest. When was the last time you took a good look at your spending habits? Is there a streaming service you never actually watch that you could do without?
Kicking the year off with healthier habits and routines is a smart way to take back control of your finances. One financial habit to commit to this year is “no-spend” days. These are days where you don’t spend any money. It simply means deciding to make a coffee from home that morning or holding off on that online purchase. With the majority of us now working from home, incorporating no-spend days into your weekly schedule is hopefully a little easier.
If you’re worried about your finances, our team is here to help! Book an appointment online to meet with one of our experienced financial advisors who will design a custom plan to meet your needs.
Want to track your spending and hold onto more money? YNCU’s household budget tracker is a great resource to help you take control of your spending. You can also check out our latest blog, “How to Build a Better Budget.”