New Years’ Resolutions, Budget Style
Updated: Jul 22, 2018
Making a resolution to get your money under control will change your life. Budgeting expert, Nathan Lippincott, shares tips to help you stick with your resolution this year.
A fresh new year is a wonderful thing. It feels like a chance to press "re-start" and commit to trying new things or developing new habits. If you're here reading this blog, chances are you're setting a New Years' Resolution to make progress toward financial freedom. Congratulations! This is a resolution that will pay off now and in the future.
Let me share some encouragement with you.
One thing I have learned about goals is that oftentimes, we spend too much time thinking about them. If you want to drop some pounds and you continually say to yourself, “Do not eat the donut; you are on a diet,”then that thought consumes you and your chances of eventually consuming the donut increases.
Give this a shot: Focus on the positive aspects of an action. Instead of saying "do not eat donuts," say to yourself, “I am losing weight by not eating the donut; I am making a healthy choice for my body.” This can have the opposite effect of the first approach. Do not think about the food that you aren’t eating; think about the weight you are losing and how wonderful that will feel.
The same goes for any resolutions regarding your budget plans for the new year. Do not think about your debt and the discomfort that comes from making sacrifices. Instead, focus on the joy and freedom that being debt free brings you. If you are choosing to reduce spending and tighten your budget, think of how much extra is going into your retirement or what services and ministries you can contribute to with the extra. Think of the joy you could bring to others. If you are increasing your retirement this year, imagine what you will do with it someday – think about your vacation home, or the fancy car that you may purchase.
Start with Paying Off Some Debt
Lowering debt is absolutely necessary in order to build momentum in the journey towards financial freedom and security. Normally I would suggest paying off the smallest debt first, and then rolling each subsequent payment into the next until all are completed. Another approach I suggest is to cut spending. If you already have a solid budget in place, tighten it a bit more and find a few places you can reduce spending. Perhaps set aside less for eating out or Starbucks. Maybe reduce the grocery category and research ways to produce meals in bulk for less. Try to give your budget some “breathing room,” so there is more available for retirement plans.
Build an Emergency Fund!
Try and have three to six months of savings in your account for a major emergency, such as loss of employment or a major medical bill. This will also reduce stress in daily life for you and your family.
Start Saving More for Retirement
Add just one percent of your paycheck to your retirement fund; this will not feel like a “lot” but it will add up and benefit you in the long term. Try to increase your retirement savings to approximately 15% of your household income. Remember: you can never have too much in your retirement. Make a commitment to do this for your retirement savings each year.
Meet with a financial advisor
My passion is financial advising and helping people reach their financial goals. We can go over hidden fees that you may be paying that you do not have to in your retirement funds. I can help you find the best places for your money and the best ways to utilize your budget. Getting an outside perspective on ways to improve your financial plans in the coming year will help tremendously with reaching your goals.
Tip: If you are debt free and well disciplined, I suggest reaping some credit rewards. There are quite a few cards that will give you money back on your purchases. Try putting all of your groceries and bills on this kind of a card – making sure you pay it off in full on the due date – and using the money back in rewards for things that you may need. It could even help pay for Christmas the following year!