By Alicia Kellebrew
NFCC Certified Financial Professional
The Village Financial Resource Center
With a new year staring us in the face, many of us take a look back at the previous 12 months to celebrate our successes and take inventory of things that didn’t go quite the way we planned. We also often welcome all the promise and possibility that a fresh start brings with some New Year’s resolutions. If financial resolutions are on your radar this New Year, what kinds of resolutions could or should you make, and what steps can you take toward achieving them? Here’s some help:
- Make a plan to reach your financial goals: Just like you can’t get to an unknown location without directions, you can’t get where you want to be financially without a plan. It’s a good idea to follow the SMART criteria: specific, measureable, attainable, realistic, and timely.
- Create a budget: Now that you have some goals set, you need what I like to call a “budget blueprint.” Even if you have to estimate the figures for this initial budget, it helps you to see how all your expenses fit together and gives you something to compare your figures against later. Throughout the year, you can check your progress and see where you may be able to make adjustments.
- Be more aware of where your money is going: I will be the first to admit that this is probably the least fun step, but it is eye-opening and essential part of the process. The best way to do this is to write down everything you spend for at least one month – two or more months is better, because there is bound to be one month where expenses may stray from the norm. Writing everything down will help you become aware of where your money goes instead of staying on “spending autopilot.”
- Stick to a budget: This tends to be the hardest part of managing one’s money. It is easier to make the plan than to implement it. Ideas to help stay on track include finding an accountability partner; using a cash envelope system where cash for each category is put into an envelope and when it is gone, spending for that category is done; or updating the balances available for each budget category daily.
- Save more money/Start or add to an emergency fund: Many people know they should save and really want to, but they find themselves falling short of the goal. Remember that while it is recommended to have at least 3-6 months of living expenses in an emergency fund, you have to start somewhere. Many people get so overwhelmed that they simply never start. Instead of getting overwhelmed, get excited about doing what you can! Decide on a set amount to save each month and write it into the budget as if it is a bill. It’s just like the old saying: “Pay yourself first.” This is more effective the waiting to see how much is left at the end of the month.
- Knock down debts: The first thing to do is stop creating new debt immediately! Do some work with your budget and find areas that you can trim in order to free up funds to be able to pay more than just the minimums required. If you are feeling extra motivated, you may decide to take on additional side work or a part-time job and devote the extra money that comes in to debt reduction.
Bottom line: A brand new year is the perfect time to start some positive new habits that will have a major impact on your financial future. Money management is kind of like a muscle – the more you work on it, the stronger your abilities will be. So don’t get discouraged if it doesn’t go smoothly at first. Just as your financial situation didn’t develop overnight it will take some time to get where you want to be. I, personally, believe that with a little work, 2016 can be your best year yet! If you need some help getting your finance in order, contact us at The Village Financial Resource Center at (800) 450-4019.
About the author
Alicia Kellebrew is a NFCC certified financial professional with The Village Financial Resource Center (www.helpwithmoney.org).