The time for considering New Year’s money resolutions is almost here. While you may mean well, research shows that not keeping those resolutions will cost you up to $1,000 each! Here are 5 New Year’s money resolutions that you won’t keep and a few ways to make sure that you aren’t losing money trying to save them.
New Year’s Money Resolutions You Won’t Keep
I’m going to save more this year. This is one of the most popular New Year’s Money resolutions. It’s great in theory but lacks any plan or specifics. How much do you want to save? How much are you going to save in a certain time period? What are you saving for? These are all questions you need to consider. It is very simple to set up an automatic withdrawal from your paycheck each period. Since it’s gone from your paycheck before you see it, you likely won’t miss it.
I’m going to spend less this year. Eliminating wasteful spending is always a good idea, but if you don’t know where or what you are spending, you are likely going to fail at this resolution too! There are so many places where you can save money, but first you have to know where you are spending it. Track your spending for a month or so, then look for ways to reduce it. If you spend a lot getting coffee on your way to work, consider making your own at home a couple of days a week. That way, you get your treat, but you still save money too! Every little bit adds up.
I’m going to pay off my credit cards this year. Again, knowledge is power in this case. Know what you owe! Call your card companies and ask if they will reduce your rates. Paying more toward the principal owed on the card will help you get the balances lowered. Start with the smallest card and pay extra on that one each month. After that is paid off, move to the next card and so on. Once you have paid off the cards, don’t be tempted to use them again without either knowing you can pay it off when the bill comes or having a plan for paying it off within a few months.
I’m going to improve my credit score. Good for you for knowing your credit score and wanting to make it better. Get your annual credit report and look for items that may be bringing down your score. Make sure that all information contained in the report is accurate. Then look for things that you can clear up quickly – a small balance that you may have forgotten or a payment that you can get back into on-time status. Be aware of how much debt you carry in relation to the income that you are producing. Many lenders are using both credit score and debt-to-income ratios now.
I’m going to max out my 401(k). This is one resolution that you may be able to keep because you can set the percentage of withdrawal from your payroll checks, but the question remains – should you? If you haven’t set up savings to get you through lean times now, it doesn’t make sense to be taking more money out to save for later. Fund your 401(k) up to the point of any matching funds from your company. Then work to fund an emergency fund for up to 6 months of your expenses. Once that is in place, then contribute to a Roth IRA. Your final step then could be to add additional funds to those taxable funds.
New Year’s money resolutions are easy to make, but not always easy to keep. These tips can help you from making money mistakes and arriving at the end of this year with no change in your financial situation. The most important thing to remember is that no matter what, you have to live within the confines of your income. It’s up to you to make the best use of those limited resources, but it can be done with careful thought and preparation.
What are your New Year’s money resolutions? How will you make sure you stick to them?