It’s that time again! Time for that yearly appointment we make with our future selves. You guessed it, New Year’s Resolution time. The two most popular resolutions for many Canadians are: 1) diet and health 2) money and finances. While we aren’t knowledgeable enough to offer any great tips and tricks for sticking to that pesky New Year’s diet, we can definitely help out in the finance department. So here are a few money resolutions to help you make a great plan for 2018 and stick to it!
1. Be positive:
When wording your resolutions, try to use positive words instead of negative ones. Instead of a resolution worded "stop bad spending", reword it to "adopt healthy spending habits". Instead of "stop making only the minimum payments", reword it to "increase debt payments". When making resolutions, it should be an exercise of positive improvement and not a guilt-trip over the past year’s mistakes.
2. Identify your financial goals:
Before you can begin to improve something, you need to know where you need to improve. You need to sit down and thoughtfully write down some clearly defined financial goals. Identify concrete things such as buying a home or paying down credit card debt. Much like weighing yourself weekly as a way to track your diet progress, your finances also need a weekly check-in. Identify a way to mark your progress and rejoice in your weekly triumphs.
3. Make it measurable:
As mentioned above, a clear mistake that is often made is not creating resolutions that are measurable. Things like "save money - spend less" can easily feel like they aren’t being achieved. Figure out an amount that you would like to save weekly or monthly and work towards that specific number. Figure out where you would like to spend less and cut that one thing from your weekly spending. Make it something that you can see and hold yourself accountable for.
4. Track your budget:
One of the classic mistakes is making an unrealistic budget. It inevitably leads to falling off your resolution as it can’t be sustained. Take a month to simply "track" your budget and identify where every last dollar is spent. Then, the following month, decide on one or two areas that you can improve. Example: perhaps after tracking the $5 daily morning coffee expense you realize that simply taking your coffee in a travel mug from home can save you a whopping $100 a month. Taking a month to quantify where your money is going and then analyze and decide what spending habits you are willing to change can make sticking to a budget much easier.
5. Check your credit report:
Did you know that you can request a free credit report from the major Canadian Credit Bureaus? You can set up a system with the credit bureaus that any change in your credit report triggers a notification to be sent to you. Tracking your credit and staying on top of how things are going is one of the best ways to actually improve that elusive credit score.
6. Create "no-spend" weekends:
This is my personal favorite and has turned into family fun time! Life can get so fast, and we all know that fast = expensive! This fun little tip is an exercise in changing lifestyles. As a family, or perhaps with some friends, identify one weekend per month as "no-spend" weekends. It is a weekend where no spending is done. There are all kinds of ways to turn that weekend into some fun family or friend time! Have at-home living room picnics or binge watch your favorite series with some friends. You’ll actually start to look forward to finding new and inventive ways to make these weekends awesome. And you will find yourself looking forward to these monthly dates more than going out!
7. Start thinking about retirement:
One of the best resolutions is to start (or increase) contributing into a retirement savings plan. People often put this off until it is too late. They feel that they don’t make enough money to be able to squirrel some away. But, if we take the example above about the $5 coffee per day adding up to $25 per week, boom! You just added $100 monthly to a retirement plan. Many people find that getting their bank to put them on an automatic withdrawal of a small amount makes it much easier to save that money: out of sight, out of mind! So contact your branch to see about setting up a weekly automatic withdrawal of an amount that you determine fits into your budget. Your future self will thank you!
8. Pay off some debt:
Making realistic goals is key. Once you feel that you have started "failing" in your resolutions, the instinct is to simply quit. To avoid that, instead of a resolution to "pay off all debt", start smaller. Take one debt and commit to paying it off. Or simply commit to increasing the amount that you pay towards your debt. Instead of making minimum payments, pay 10% more than the minimum. You will be surprised how much faster your debt goes down when you start paying an amount on the capital.
9. Get some advice:
There are people who have knowledge and experience and can help you on your path to financial wellness. One of the common things that I hear from people is that they feel that they "don’t make enough money" to make an appointment with a financial advisor. The truth is, even putting $5 a week into a retirement savings fund means that you are an investor. Make the appointment. Speak with an advisor. They will have useful and valuable advice for your specific situation that can help you make a budget, stick to it, and achieve your 2018 resolutions.
10. Don’t give up:
Just like a diet, there will be cheat days. There will be weeks when you don’t stick to your budget or you miss a payment. This is when it becomes all too easy to throw in the towel and give up. DON’T! We all mess up, we all have bumps in the road. What makes us successful is not never hitting a wall, it is finding a way over that wall and continuing on our journey.