As 2018 approaches, you’re probably doing the same thing as many others—taking stock of the past year while thinking ahead to the new one. And if you’re like a bulk of resolution makers, you may be focused on improving your finances.
According to a 2017 iQuanti study reported by NBC News, spending less and saving more is one of the top five New Year’s resolutions, with nearly 16,000,000 people searching Google for related queries last year. But once you’ve decided to focus on your finances in the new year, the problem often becomes how to stick with it.
By surveying your current finances and your activity over the past year, you can develop reasonable goals and a working plan to meet them. From there, sprinkling in some easy tips can get you moving forward on a budget that works for you—without sacrificing the important things in your life.
Take a deep breath and begin preparing now, so you start 2018 off on the right financial foot.
After the celebration of the new year, it’s time to get to work.
Do your homework
To improve your finances, you need to know where you currently stand. Look at your bank accounts, credit card statements, and any other assets you may have to see how much you are spending and what you are spending on. Then, review your income—including any benefits—so you can compare what is coming in and what is going out. If you’re spending more than you earn, it’s time to change that and be a bit more aggressive when developing your budget.
You’ll also want to look at any long-term debt you carry. Home or student loans, credit card balances, and other debt should be a priority when it comes to allocating your budget. Loans mean accumulated interest and more payments, meaning less savings for you.
Clear goals will help you focus on your finances.
Set your goals
The idea of “saving more” is a good one, but what does that mean to you? You need to set specific goals for saving and spending habits, both so you know how to implement changes going forward, and so you have a way of tracking your progress. Clarifying goals ahead of time will help keep you motivated throughout the year.
The American Psychological Association (APA) recommends keeping your focus small to achieve your resolution goals successfully. The goal is not to make immediate, drastic changes to your lifestyle but rather, to grow your financial security in manageable increments. When you feel like you can actually reach your goals and you start crossing them off your list, you’ll gain the confidence to keep moving towards success.
When you have specific goals, you can also take the steps necessary to get yourself the right support. No one is perfect, and you’re bound to slip up here and there as you work towards reaching your goals, but you want to have a plan in place for rebounding if and when that happens. If you give in and splurge on a night out, you shouldn’t feel the need to throw all of your progress and efforts out the window. Stay calm, reset, and stick to the plan.
For financial goal-setting, try linking your planning to your pay-periods or calendar months. It’s important to see the big picture, but it’s much easier—and more encouraging—to track things on a smaller level. Some examples of goals you can set include:
- I will put __ of each paycheck into savings
- I will save __ each month
- I will not spend more than __ on groceries each week
Ready to save? Time to make a plan for your money.
Create your plan
You’ll need a plan and a budget for the new year in order to make reaching your goals achievable. Unfortunately, a world of temptation often stands between you and your savings success.
Overspending is far easier than over saving, especially if you’re not aware of the temptations you probably come across every day. Some of the most common ways people overspend include:
The allure of a deal
Sales and special deals on items you love make it easy to fool yourself into thinking you’re getting a bargain–while you forget that you didn’t account for that item in your budget. There’s a psychological component to deals as well; a recent report from MarketWatch shows just how much retailers tap into emotions to have you think spending makes you feel good.
How to succeed: It’s impossible to avoid shopping, so how can you prevent yourself from being manipulated to spend more than you planned? Take a list with you when you are going shopping and force yourself to only purchase the items on your list. If you’re going to a store to replace your broken umbrella and pick up a greeting card for your mother, but you desperately want a newly released lipstick, would you sacrifice getting wet in the rain or disappointing your mother for it?
A one-time windfall
Whether it is your tax refund or an inheritance, getting a lump sum of any size can easily spur an unintended spending spree. These items are not accounted for in budgets and day-to-day finances so they often feel like “free money” that you can spend as you want.
How to succeed: Any time you receive unplanned funds, put them directly into an account; they should then be directed towards your goals. Use direct deposit to make sure that the money doesn’t even touch your hands; if you don’t have an account to receive direct deposits, try picking up a Green Dot 5% Cash Back Visa® Debit Card (view Green Dot’s simple fees here). Now look at your list of goals for the year, and see how that money can help you. If you have a big bill to pay off or a savings account to beef up, in the long run you’ll feel better in the long run about financial security than you would about a new handbag.
Keeping up with the Kardashians
If you are continually spending above your means—including a cup of coffee with a friend or shopping for luxury brands above your budget—it will be harder to reach your savings goals, and your lifestyle could quickly become unsustainable.
How to succeed: Have friends who always like to eat at the nicest (read: priciest) restaurants? Start inviting them over for dinner dates to cut costs in half. See if any of your friends are also planning on budgeting for 2018, and you can work together to have fun while keeping costs down.
After a particularly frustrating day, buying something for yourself can feel good. But looking at your account statement the next week probably won’t feel anywhere as good. Try to break the mindset of “retail therapy” and instead, find more productive ways to better your mood.
How to succeed: Skip the mall for a pick-me-up and find a free or low-cost yoga class; exercise will help improve your mood, and of course, you’ll reap physical benefits. Give yourself a lazy night watching your favorite movies, or get in bed extra early with a good book. There are simple luxuries all around you that don’t cost a thing.
Keep your resolution all year long with the right budgeting and tools.
How proactive money management will help
When you make a resolution for the new year, you typically mean to pursue that goal for the whole year. Finding ways to be proactive with your money management will help support your budget and will help ensure that you see success.
One of the best ways to maintain sustainable finances is only to spend what you have. With Green Dot’s 5% Cash Back Visa Debit Card you’ll get access to your money when you need it, direct deposit for your income and any additional windfalls, and easy ways to add cash. Use tools like a free mobile app and text alerts so you know how much you have to spend, no matter where you are. Get your very own Green Dot 5% Cash Back Visa Debit Card today and start 2018 right. View Green Dot’s simple fees here.