One of the oldest – yet hardest to stick to traditions – is making resolutions for the New Year. According to a study published by the Journal of Clinical Psychology at the University of Scranton, a mere 8% of Americans who make resolutions for the New Year become successful at making them.
The top five resolutions for 2015 include:
- Losing weight
- Getting organized
- Spending less and saving more
- Enjoying life to the fullest
- Living a healthier lifestyle
A good 75% of those who do make resolutions stick to them during the first week, but slowly veer away from their list after two weeks, one month, two months, up to six months.
If your list of New Year’s resolutions include spending less and saving more – how can you stick to it? What are the ways that you can improve your finances for 2015 without falling under the trap of never finishing what you started? How can you set realistic financial goals for yourself?
Here, we will take a look at the importance of ironing out your finances at the onset of the year, and dish out specific tips on how you can accomplish such feat.
Why You Really Need to Double Your Finances This Year
First, why is the New Year as good a time as any to iron out your finances? If you have made resolutions in the past to stick to a budget, but you always overshot it, there’s no reason why you cannot do so now. The key to succeeding in sticking to an annual financial goal is to iron out your finances initially. From there, you can create a plan on how to be financially healthier, get the funds to save up for your college-bound kid’s tuition, start saving up for retirement, finally go to that well-earned vacation, or achieve whatever your finance-related goals are.
A good step to take would be calculate your net worth. Make a list of all your assets and liabilities. What are your existing debts? Do you have any assets which are sitting idly, that you can probably squeeze out profit from? Next, assess your spending habits. What is your monthly household budget like? If you are spending too much on utility bills, implement ways to save on electricity. That old refrigerator that you have may be eating up on your electrical consumption. Replace it with an energy-saving model which is more efficient, and you will realize huge financial savings by the end of the year despite a big initial investment.
You also need to take a closer look at how you are paying up your debts and monthly financial obligations. Starting from your credit card bills to your monthly insurance payments, all these should have an allotment based from the amount of income coming into the house. By having a clear, precise picture of what your finances are like at the onset of the year, you can make adjustments in specific aspects and successfully reach your financial goals.
Ways to Improve Your Finances
Next, what are the specific ways that you can improve your finances for 2015? Take a look at the following tips:
Have a fresh start financially
Forget about what happened last year. Whether you suffered from a job loss which hampered your earning abilities, if you filed for bankruptcy or experienced anything negative that’s finances-related, 2015 gives you a fresh start on things. Do not fall into the trap of having that feeling of shame about how you spent your money in the past.
If you insist on dwelling on your past financial mistakes, you will never really move on from it. You can go ahead and reflect on the mistakes and bad financial decisions that you made in the past – but only to learn a lesson from it. Take those lessons to heart, vow not to make them again, and reward yourself with the chance to start over financially.
Set realistic financial goals
Next, it is very important for you to set realistic financial goals for yourself. As mentioned earlier, the start of the year is as good a time as any to assess your current financial situation. Write down those figures up to the decimal point. This will give you a precise picture of the finances that you will be working with for the rest of the year.
From the scenario that you have created, you can set realistic financial goals for yourself. However, do not hesitate to be overly ambitious about the things that you would like to achieve for the year. Be it an expensive trip to Europe, a sports car or a complete renovation of your tired old kitchen, these goals will give you the drive to earn more and work hard to increase your earnings for the rest of the year.
Take advantage of the convenience and savings from online shopping
When you sign up for an online shopping site, you can usually sign up for a newsletter that allows you to earn coupons or enjoy instant savings once you start filling up your shopping cart with goods. Take advantage of this, although it’s also a good idea to only stick with buying the items that you need or can afford to buy.
There are also luxury items that you can actually rent instead of buy. If you would not like to deprive yourself of the pleasure of wearing a designer dress for that corporate party, websites like Tradesy allow you to buy and sell bags, dresses, suits and accessories. Wearing the items will make you feel like a million dollars, but without burning a hole in your pocket.
Don’t miss out on additional earning opportunities
When was the last time that you had a strong resolve to earn more? There’s absolutely nothing wrong in settling with the income that you are currently earning. But there is also no rule saying that you should pass up on the opportunities to earn more – especially if they unexpectedly fall on your lap. Once your bank account starts expanding as a result of all that hard work, you can thank yourself and get a well-earned break. But before that, you have to work hard for it so do not miss out on additional earning opportunities.
Don’t pay any more in taxes than you have to
While mapping out your financial goals, do not forget to scrutinize the taxes that you are currently paying. If you’re a small-scale entrepreneur, for example, you can replace your existing office furniture with new ones and write it off as office expense. This will save you a good amount on taxes, especially if done by the end of the year. Other ways that you can pay less in taxes is by putting more money into pre-tax retirement accounts or investing in bonds.
Extract the utmost benefits from your savings account
If you found a side job, a second job or totally changed your career for more earning opportunities, make sure that your savings account grows with it. Unfortunately, most financial institutions offer very little interest rate for clients who are filling up their coffers on a safe yet boring savings account.
If your current bank is offering very little in terms of interest rates, look for other financial products that you can go for. Make sure that you are not paying any more than you have to on banking-related fees, such as dormancy charges or hidden fees. If you have to, talk with a financial expert so that you can check out what other options you have when it comes to growing your money.
Brace yourself for increasing interest rates
Financial experts predict a sudden rise in interest rates especially after the recession. To brace yourself for this, pay off as much as you can on your existing debts before the increase in interest rates is implemented. If haven’t already done so, consider having your mortgage refinanced. Talk to a financial expert about this, especially if you have no idea about how refinancing works. If you are a first-time buyer of a car or a home, speed up the process and make the decision to buy now – not later when interest rates reach an all-time high.
Consider money an important tool
Finally, consider money as a tool that helps you achieve your goals in life. One of the biggest mistakes that people make is considering money as evil, or the enemy, so much so that they put their spending on a very tight leash. Remember that money is something that you should have fun with and enjoy spending. Once you start feeling good about money, the way that it flows in and out of your life will be a more exciting and rewarding experience.
By setting clear goals yourself for 2015, it should be a financially rewarding year for you all the way round.