Still, while those who take part in this ritual have the best of intentions, many lose their enthusiasm, eagerness, and excitement within a few weeks. Recent statistics show that only 46% of resolutions are still maintained six months into the year. While there are many understandable reasons why resolutions can be difficult to maintain, it is imperative that certain goals are kept and achieved.
Individuals who have money management, debt reduction or other financially-themed resolutions should work especially hard to stick to their objectives. Because January represents a new beginning, and because of Canada’s current economic situation, 2013 is a great time to start planning and to begin making prudent decisions about your finances. Financial resolutions set the stage to address bad financial habits, and allow for you to finally achieve financial security.
Credit Counselor Stacey Townsend says that, “At Money Mentors, we understand why many people are unable to achieve their New Year resolution, especially when it is centred on money management or debt reduction.” According to Stacy, this is because achieving financial stability can sometimes be a very complicated and arduous process. It takes a lot of self-discipline, time management, dedication, support, and reliable tools and resources for an individual to reach a financial position of comfort. Stacy advises people with finance-related resolutions to:
Get Organized – Have a clear picture of where you currently stand financially. Take a look at your income, investment, insurance, assets and debt. If you do not know your current financial position, it will difficult to achieve your resolution.
Set financial goals – This helps you focus on what you wish to accomplish in 2013. Perhaps you hope to pay down debts, or maybe you are aiming to start an emergency fund or start saving. Prioritize these goals. Realistically, you may not be able to simultaneously work on all your resolutions, so work in order of importance. And remember, goals should be SMART: specific, measurable, achievable, realistic, and time specific.
Create a budget – A good budget helps you stay in control of your money. If you are unsure of where to start, begin by keeping track of all your incoming and outgoing funds. Create spending categories such as food, entertainment, credit card payments and rent. You may want to cut back on or even eliminate certain purchases if your debt exceeds more than 40% of your income.
Start saving – Start saving for your irregular expenses, such as an emergency or retirement fund, as soon as you can. A pay increase at work or a tax refund can be opportunities to contribute to these funds. You may also need to cut back on some of your expenses. Areas you may be able to reduce your bills include your cell phone payment, cable, unnecessary credit card interest, and eating out. Attempt to set aside one day each week where you do not spend any money, and instead put that money into a savings account.
Pay down your debt – Stop using your credit card unless you know you can pay it off fully before the end of the billing cycle. You can also talk to your bank about reducing your interest rate. Always try to find an area to cut back on in your budget so that you can pay off your debt or build your savings more quickly. Do you have items that you no longer need? Try a garage sale, or one of the many available websites online on which you can sell what you are no longer using. This approach can help generate some extra money to pay off debt.
Always remember that nothing worth doing is ever easy. You are only in January, and so you have a promising year ahead in which to achieve your financial goals. Do not feel guilty or ashamed of your old habit; what is important is that you have chosen to make a change. Work hard and commit to your goals, and you will achieve this year’s resolution to achieve financial stability for 2013 and beyond.
Money Mentors is the only Alberta-based, not-for-profit credit counseling agency. Through a number of services, we help families and individuals recover from financial crisis and move forward. From credit counseling and money coaching to retirement planning and community financial literacy, we are creating a healthier financial future for the entire province.
Reprinted from Money Mentors