The start of a new year is the perfect time to assess where you’re at financially and make some adjustments. Where most people go wrong is, they pick goals that are super vague (i.e. to “get out of debt” or “save more money”). While the ideas behind these resolutions are good, they’re hard to stick to or follow through on because they’re not specific or actionable enough. Meaning: most people don’t end up seeing a change or feeling very successful in their endeavors.
Here are my top five areas of focus and tips for instituting meaningful financial change in 2019:
1. Know the “big-picture”.
If you don’t know why you’re getting out of debt or saving more money, you won’t have a very strong or lasting motivation to do so. Not only that but it will also be more difficult to map out a plan.
2. Get very specific about what you want and how you’re going to achieve it.
For instance, if your goal is to “get out of debt,” figure out where you’re going to start (i.e. which card will you tackle first? Or, what amount will you pay towards each of your cards on a monthly basis?). The more specific and detailed you can get the better. Having the steps clearly defined makes them easier to act on and more difficult for you to bail on your commitment.
3. Know where you stand.
Not sure where to start? It’s a good idea to take stock of your situation and know where you’re starting from in order to get where you want to go. For example, are you keeping track of how much you’re making, how much you’re spending and what you’re saving or investing each month? Do you know what your net worth is? If not, it might be time to look at those things and be more intentional about how you manage your money.
4. Get out of debt.
For many, this is a top priority for the new year and rightly so. According to NerdWallet’s annual debt survey, “the average U.S. household with credit card debt has an estimated $6,929 in revolving
Paying down and getting out of debt is important because revolving balances mean lots of interest. That $6,929 figure, for example, would equate to $1,141 in interest paid this year. If your debt is higher, the amount you are paying towards interest would obviously be higher as well.
Now, there are many options available as far as how to tackle your debt—some of which I will explore in future posts. But, the best choice for you depends largely on what your current situation is and which method you will stick to. You can have all the plans in the world but, if you don’t implement and stick to them, they are useless.
5. Invest in your future.
Another popular resolution is to increase savings, specifically what you are investing and setting aside for retirement. Depending on when you plan to retire and begin taking Social Security benefits, you may need to have as much as ten times your pre-retirement income saved up.
Getting started or beefing up the amount you are investing is always a good idea. It is so much harder to make up for the time and compound interest lost down the road.
For more on investing wisely, see the following posts
Interested in learning more or exploring your options? I would love to chat via a FREE connection call.
Light and love for the new year,