As the year end draws near, one thing, as you buy gifts always jumps into the forefront of our minds, money. Every year we say that we will get it together, get those finances in order, and keep on track as the new year approaches. One mistake we make is thinking to large in our financial resolutions, which most time than not leads to failure, and we end up giving up on the whole thing. If you look at your goals and break them down into smaller chunks you will likely stay on track, and reach your sure fire financial resolutions for the year.
Factors To Be Considered
There are certain factors that should be considered before you leap into a new financial resolution. There is no one sure fire way to make a change. Changing in small ways will make the transition into the world of financial freedom easier and lasting.
- Make a Budget
- List out Your Long Term Plans
- List out Your Short Term Plans
- Curb Your Holiday Shopping
Pay Down Your Debt
As the holiday shopping season approaches we often regret not paying down our debt in the few months before the seasons rush. If you decide in July or August to start sending in extra payments and getting that debt load down in the late summer months, you will be well ahead of the game in the holiday rush. Getting into more debt at the holiday season, while not getting it reigned in when spending is lighter, like it is in the summer months can create a downward spiral that once the new year comes and all those bills come in you will be overwhelmed and all the effort you put into your sure fire financial resolutions will fail.
Be a Better Shopper
Needs and wants are two completely different things, needs are necessities and wants are luxuries, understanding the difference is one thing, but recognizing it while it is happening is harder, we as humans want all the things in life that we can get, and we can talk ourselves into that purchase even though our practical side know otherwise. According to the Wall Street Journal a jaw dropping price or are emotional, especially during the holiday season will make irrational buys of want items. You need to be a better shopper, smarter than yourself, and see these triggers and understanding the effects it will have on how much money you can spend.
Set Up Your Emergency Fund
Just because it is the holiday season does not mean that a real emergency cannot come up, a furnace or major car or home repair can thwart the best laid intentions, so planning all year to set aside money each pay period to an emergency fund is a wise and calculated idea, it can give you piece of mind. Six months worth of expenses is the rule of thumb, in an easy accessible account. Liquidity is key here with as little penalty for withdrawal, if it is in fund or money market type of account.
Set Aside Some Money for Fun
In the end, they holidays are about fun, and why not splurge on yourself for once. It may seem like greed to treat yourself, but in the end, if you don’t you will feel left out. After all you work hard each and every day to make and save that money, to not enjoy it is just not right. If you plan for these activities, trips, or material items you will not feel guilty once that time arrives to open those bills in January. Just make sure that you keep the fun within reason and don’t go overboard, you will regret it down the road.
It Just Takes a Good Plan
Setting goals for yourself for the new year are a good thing to do, it is a reflective time when you can put some perspective on the last year and set goals for the year to come. But keep in mind that you should always start with a solid budget and have a road map of your current short term and long term goals. And you must be a smart shopper, all year round. If you use these factors to frame your sure fire financial resolutions you can achieve your goals. Remember to set those resolutions in small chunks rather than one big colossal plan, that way if you slip in one of the smaller details you can still succeed in the overall plan. Pay down your debt throughout the year, set up your emergency funds and have them in place, for the unexpected, and last but not least treat yourself to some well earned fun with your own money, you will be grateful for the bounty that you earn and not feel guilty when the bills come in.