Quote of the Week: “Always bear in mind that your own resolution to succeed is more important than any other.” ~Abraham Lincoln.
As January comes to a close, we need to take stock of the month that sets the tone for the rest of the year. Many of us set goals every year. You can call them New Year resolutions but let’s not call it that as some of us have negative attitude towards resolutions. We plan to either to save more, loss weight, invest more, minimize debt or save for retirement, but most of us almost always end up not following through these goals.
So how do you make sure this year will be different, at least for your financial goals?
Calculate your Net Worth
If you have not done so already, the New Year is a good time for determining what you are worth financially. Calculating your net worth is a key step in assessing your financial health and reaching your financial goals.
Looking closely at your net assets (or net worth) helps create a clear picture of where you are financially, prioritizing your current and future spending and saving and where you need to make changes in your spending and saving habits.
It is a good idea to recalculate your net worth frequently to keep on top of your progress towards your financial goals and correct any mistakes you might be making.
[Read More: How to Calculate Your Net-Worth]
Set positive financial goals
One reason we find it hard to keep financial goals is that we frame them in a negative manner. We think of a goal like ‘spending less’, for example, in terms of what it will deprive us of instead of what it will give us. When we think of savings, we think of all the things we can’t spend that money on.
Instead of viewing it as a depriving factor, write down your goal and all the specific positive things it will give you if you achieve it.
Don’t just purpose to save this year. Save with a purpose. Do not think of savings as an end in itself. Think of it as a means to an end. Save to start a business or raise fees so you can go back to school or to buy a car or to take your family on holiday. This will give you the motivation to keep saving.
In addition, when making a goal, ask yourself if it is achievable.
Make specific plans with room for setbacks
The problem with the goals that we make is that they are not specific and are often not accompanied with specific plans on how to achieve them. For example, for a goal like saving more, people must:
- Write down a specific amount of money they plan to save each week and/or month for the entire year.
- Outline a proposal to make it happen that includes which expenses to reduce to get the savings, where the money is to be saved and when to be making the contribution from the savings; and
- Lay out a plan to deal with setbacks that addresses what happens going forward should something happen that prevents you from saving or something that requires you to dig into your savings.
Avoid Drastic Lifestyle Changes
One of the biggest keys to making a financial resolution you can keep is to avoid resolutions that require drastic or sudden lifestyle changes.
For example, cutting your budget in half may seem like a good idea on paper but this kind of radical change might turn out to be very difficult to sustain. Most likely you will slip back to your old spending habits. Instead, create a plan that you can stick to and if your goal is too ambitious, plan to attain it in small increments.
There are many ways you can keep yourself committed to your financial resolutions. One way is to make saving automatic by setting up automatic transfers or standing order to your Savings Plan.
Motivate yourself by writing down the reasons you set these resolutions and revisit them on a regular basis.
Whatever your financial situation, this year presents an opportunity for improvement. Whether you are skating on the edge or your finances are in tip-top shape, take some time to think about where you would like to be.
When you evaluate 2019 in December this year, what will you want to say to yourself? Write down those goals somewhere and begin working towards achieving them. This should be interesting to read at the end of the year.
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