There’s nothing like the end of the year to send people everywhere into a panic over all the things they haven’t accomplished in the last 10-plus months. We all have the best of intentions when we make those resolutions each year, but more often than not, they tend to fall by the wayside somewhere around March (if we’re lucky).
Although we can’t help you master that second language or better your relationship with your mother-in-law, we can lend a hand when it comes to those financial goals you made back in January — and then promptly forgot about.
Vowed to pay off your credit card debt? Swore you’d figure out what a 401(k) actually is? Trying to save up for a home or dream vacation? No matter what money goal you’re hoping to salvage, these tips can help you get there.
1. Reassess Your Goals
Before you beat yourself up for being a financial failure, take some time to reflect on the goals you set for yourself and gauge just how realistic they were. For instance, if your yearly income is $50,000 and you wanted to save $50,000, you set yourself up for failure. But if your goal was to save $5,000 and you’re nowhere near that, there could be greater issues at play, says financial planner Matt Shapiro, CFP®.
To figure out how attainable your goals actually are, Shapiro recommends looking through your financial records for the past year. Was your spending what you expected it to be? Did you earn as much as you thought you would? Once you can see the bigger picture, then “you may need to either realign your goals with your income and spending, or realign your spending with your income and goals,” Shapiro says.
2. Check Your Budget
If your goals weren’t the issue, that means something else went wrong along the way — most likely your spending. Take a look at your past credit card statements or other financial records to see where your money went, advises Shapiro, and what can be adjusted.
And while you’re digging into your records, take a look at what you spent this time last year — then set a goal to spend a certain percentage less this year, like 15%. Not only will this help you keep holiday spending under control, but it’ll also help minimize lifestyle inflation (that thing where your spending increases along with your paycheck). So instead of using your higher salary to buy more lawn reindeer and an inflatable Frosty, you can apply that increased income to your goals.
3. Look for Easy Ways to Save
As you were going over your bank statements, you probably noticed a lot of the same monthly expenses. Some, like your phone or internet bill, are necessary — but that doesn’t mean you can’t try calling to negotiate a better rate, suggests Shapiro. And others you can eliminate altogether, like the gym membership you never use or those weekly meals you get delivered that rot in the fridge four out of five times. After all, fewer monthly costs equals more money to put toward your goals.
And while this time of year can be dangerous for your spending, it can also be a great time to earn some extra income. Be on the lookout for seasonal opportunities like tutoring high school students for the SATs, shoveling snow or cleaning out rain gutters. And if you’ll frequently be out of town over the next few weeks, consider listing your home on Airbnb to offset your own travel costs.
4. Make Small Changes
You may think you need to take drastic action to make the most progress in these last few weeks of the year, but Shapiro recommends building small habits instead.
Starting with one small change — say, bringing lunch to work three days a week — and giving yourself time to adjust to it before adding another change is more likely to yield better results over time. “Once you create two, three, four, five small habits, all of a sudden you’re saving $1,000 a month — as opposed to saying, ‘Tomorrow I’m going to do these 10 things and do them forever,’” Shapiro says. “People are much more successful biting off what they can chew and building on it.”
If you start making small changes now, you’ll be in great shape by the new year.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.