Keeping your Financial New Year’s Resolutions
The new year is soon to be upon us, and will you like many before, dare to make a Financial New Year’s Resolutions come the stroke of midnight? Although as many as 40% to 50% of individuals participate in this age-old habit, studies have shown that less than 8% of individuals stick to them. And if you think about it, it’s not really that surprising since changing habits is hard work. To help you be part of the successful few who keep their financial resolutions this year, we have put together a list of our top 8 strategies that can help.
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Recognize the positive reason to set goals – people who make financial goals and keep them often achieve greater financial success.
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Make your financial resolutions SMART– Remember the acronym SMART (specific, measurable, achievable, relevant, time bound)? Set a few key goals and break them down into manageable small steps. For example, set a long-term goal like being mortgage free in 5 years, and then break it down into what it means in 1 year and in each month of the year.
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Focus on introducing a healthy new habit versus stopping a bad habit– For example you could set a pre-authorized monthly savings amount; you could resolve to bring lunch from home 3 times per week etc. Focusing on taking on a positive habit rather than saying DON’T use credit cards, DON’T eat out, etc.
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Find a coach or partner who can keep you accountable –it could be a friend or family member you trust, or it could be your financial advisor or accountant. For example, at Kerr Financial we help our integrated clients set financial goals each year by reviewing their family’s strategic objectives, risk focuses and priorities. We then help them keep on track every quarter in our regular meetings by focusing on their results and identifying how they are progressing and identifying what else they need to do.
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Make resolutions creative / fun / interesting -If you need to work on spending less, try periodic “no spend” days. These could be days where you eat at home, enjoy free entertainment, or ‘play’ outside rather than at the gym. For example, you could plan to have 15 no spend days per month, as one of your resolutions for the year.
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Have regular check-ins to stay on track – For example you could make every Monday night your ‘check-in’ night. This could be the night where you plan to pay bills, review your budget and track your progress towards your financial targets. By checking in regularly, you can make course corrections along the way to help you stay on track.
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Reward yourself – small rewards (without blowing the budget) can be fun.
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Think more broadly than just spending less and saving more
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Do you want to increase your own financial literacy? Commit to reading a personal finance book each quarter.
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If you have already saved enough for your retirement, consider rebalancing your portfolio. For example, if your portfolio has become too heavily weighted in equities you may want to rebalance to reduce some risk in consideration of the markets being at a later stage in the cycle.
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If you haven’t done so, plan to update or complete your wills. Again, focus on the positive side of completing this task; the peace of mind it will bring by knowing you have taken care of your loved ones.
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