Every time a New Year begins it’s a great time for a fresh start. While a lot of people make New Year’s resolutions to do better than they have in the past, the majority of them fail. So, we don’t do that around here. Instead, we work on consistently creating better life habits to live a more financially freeing life. Of course, not all of these are easy to do all of the time, but with practice, they can really make a big difference. Therefore, here are my favorite ways to start the New Year out right from a financial perspective.
Create Overall FInancial Goals
Setting your financial goals is a very important piece of the overarching plan. This is because it can be extremely difficult to be disciplined about money if you don’t have clear cut goals lined up. So, we have created a habit of having a budget meeting every Sunday to go over every aspect of our financial goals.
Some of the most common things we discuss during these meetings are:
- The status of our emergency fund (which is in a high yield savings account)
- Our credit card statement balance
- Any upcoming social events that will need to be paid for
- Upcoming recurring bills that will be coming out
- Any big ticket items that we’ll need to pay for (such as medical, dental, car maintenance, etc.)
- Small household projects we may need to fund
- Upcoming family vacations
- Status of our retirement accounts
Staying Focused on Financial Goals During the New Year
Once you’ve figured out how you want to structure your budget meetings, then determining how to stay focused is the next big hurdle. There are many different ways you can go about this, obviously. But, I’ve found Personal Capital to be a great tool to have handy to make my life a bit easier. This platform lets you connect all of your accounts in one place so that it can consistently monitor everything for changes. And, as a huge bonus, it gives me a bottom line as to what our overall net worth is. This number is something we look at regularly to help propel us and keep focused on our financial goals.
The types of accounts that Personal Capital lets you connect for monitoring are:
- Auto loan(s)
- Checking account
- Credit card(s)
- Investment account(s)
- Medical debt account(s)
- Savings account(s)
- Student loan account(s)
Needs vs. wants
Setting up your financial goals and a way to track them are the first steps. But staying on track with both of those can get tricky sometimes. This is where determining your needs vs. wants is important. While there are always going to be things we want to have, these are the things that can throw us off track really quickly.
Therefore, we use the budget meetings to help keep us reined in regarding this category. We discuss whether something we are considering spending money on is a need or a want and then determine if we’re going to pull the trigger or not.
Some good examples of needs are:
- Fixing the car
- Dental work
- Medical appointments
- Household emergencies (plumbing, electrical, HVAC, etc.)
- Vet appointments
Some good examples of wants are:
- Clothing in more colors or patterns
- Eating out with friends or family
- Coffee at the coffee shop (it’s so much cheaper to make it at home!)
- More toys for the family pet
Avoid peer pressure this new year
While peer pressure may not be as tough as it is during the holiday season, it’s perpetually there. Typically, we find our friends to be the biggest instigators of our increased spending on wants. Of course, it’s not entirely their fault. We make the choice to spend money on things we don’t need, but the extra push from outside forces doesn’t help us make clear decisions sometimes.
A great example of this is going out to eat with friends. Since there are two of us adults, a dinner can easily be $100 or more. That extra money could have gone into our emergency fund or our investment accounts to help boost our retirement faster. Therefore, something that sounded so innocent may have now completely derailed our budget for the month.
But, we all want to be able to have a good time with friends and family sometimes. So, it’s important to ensure a part of your budget is for things like this. Fun money, if you will. However, once you determine what this amount is, sticking to it for the month is key. A good way to do this is to limit how many drinks, appetizers, movies, etc. you choose to engage in.
This will also help you narrow down who you really want to spend time with as opposed to just burning your budget within the first few days or weeks of the month on everyone who asks you to do things. I have found that this has helped me to strengthen and solidify the relationships I really want to have in my life at the same time.
Start the New Year Out Right Summary
Overall, a New Year is a great way for a new start. It’s a good time to work on creating more beneficial, long term habits that can help you out financially. We have done this year over year since my spouse and I have been together and every year ends up being better than the last. In fact, the two of us together have done so much more together than we have ever been able to do apart financially. Even if you don’t have someone to share the financial load with, you can still hold yourself accountable. Creating healthy financial habits now will only help you year over year to get to where you’ve always wanted to be.