The new year has begun, and with it comes an opportunity to start fresh and set new goals. Whether it’s personal growth, health, or finances, the beginning of the year is the perfect time to reflect on what we want to achieve.
A popular tradition many people follow is setting New Year’s resolutions, and while it may seem like a cliché, there’s science behind this practice. Research shows that people who set resolutions are ten times more likely to achieve their goals compared to those who don’t.
When it comes to finances, getting organized and establishing good money habits at the start of the year can lead to long-term financial success. So, if you’re looking to improve your financial health this year, here are four financial resolutions and practical tips to make them stick.
1. Earn More: Start the Year with Confidence
One of the best ways to improve your financial situation is by increasing your income. However, asking for a raise can be daunting, and many people avoid doing it simply because they’re unsure of how to approach the conversation.
Yet, the new year presents an ideal time to assess your contributions and have the confidence to ask for more. If you’ve taken on additional responsibilities, contributed to the success of your company, or gone above and beyond in your role, don’t hesitate to make your case.
Tips for Success:
- Prepare your pitch: Before approaching your boss, take time to review your accomplishments over the past year. Have you helped the company save money, increase sales, or take on new clients? Gather data, reports, or even client testimonials to demonstrate your value.
- Practice makes perfect: If you’re nervous, rehearse your conversation with a friend or family member. Anticipate any questions or objections your boss might have, and be prepared to respond calmly and confidently.
- Tailor your approach: Not all managers respond to the same type of argument. If your boss is detail-oriented and data-driven, present numbers and statistics. If they’re more holistic, share compelling stories of how you’ve contributed to the team’s success.
The key is to enter the conversation prepared, confident, and with a clear understanding of your value to the company.
Making It Stick:
Once you’ve had the conversation, whether you receive the raise or not, take time to reflect on the experience. If you didn’t get the outcome you wanted, ask for feedback and set measurable goals for improvement. If you did, consider how you can continue to grow and contribute throughout the year, perhaps even aiming for another raise or promotion down the road.
2. Save More: Plan for the Future
The new year is a great opportunity to reassess how you’re saving and spending your money. Whether you’re building an emergency fund, saving for a home, or planning a dream vacation, setting clear goals can make a world of difference.
According to experts, the key to successful saving is having a plan and sticking to it. Without a plan, it’s easy to get distracted by everyday expenses and impulsive spending.
How to Start:
- Define your goals: What are you saving for? It could be a down payment on a house, an emergency fund, a wedding, or even just a vacation. The important thing is to define your goals clearly.
- Break it down: Once you have a goal in mind, calculate how much you’ll need to save each month to achieve it. For example, if you’re hoping to save $6,000 for a vacation in a year, you’ll need to set aside $500 a month.
- Cut back where you can: Review your spending habits to find areas where you can cut back. Could you reduce your dining out budget by cooking more at home? Could you cancel unused subscriptions or find cheaper alternatives to your current services?
Tools to Help:
Apps like Mint and You Need a Budget (YNAB) can help you track your expenses, create budgets, and monitor your progress toward your savings goals. You can even set up automated transfers from your checking account to your savings account so you’re less tempted to spend.
Making It Stick:
Turn saving into a habit by setting up an automatic transfer to your savings account each payday. If you don’t see the money in your checking account, you’re less likely to spend it.
Also, consider joining online savings challenges or working with an accountability partner, such as a friend or family member, to help you stay motivated. Websites like Feed the Pig can gamify the saving process, making it more engaging and fun.
3. Owe Less: Reduce Your Debt
Debt can feel like a constant weight on your shoulders, and if you’re like many Americans, you’re carrying a significant amount of credit card debt. According to a report from NerdWallet, the average American credit card debt stands at $15,611.
If you’re feeling overwhelmed by your debt, now is the time to take control. By creating a plan to tackle it, you can reduce your financial stress and free up money for other goals.
Strategies for Paying Off Debt:
- Make extra payments: If you have any extra cash—whether it’s from a raise, tax refund, or a side gig—apply it to your debt. Even small extra payments can make a big difference in the long run.
- Pay more than the minimum: Minimum payments are designed to keep you in debt for longer. Whenever possible, pay more than the minimum to reduce the interest you’ll pay over time.
- Consider balance transfers: If you’re struggling with high-interest credit cards, consider transferring your balance to a card with a lower interest rate or even a 0% introductory offer. Just be mindful of any fees associated with the transfer.
- Snowball vs. avalanche method: The snowball method involves paying off your smallest debts first to build momentum, while the avalanche method focuses on paying off the highest interest debts first to save money on interest. Choose the method that works best for you.
Making It Stick:
To stay motivated, celebrate small victories along the way. For example, if you manage to pay off one credit card or reduce your debt by a certain percentage, treat yourself to something small—within reason, of course. Additionally, set milestones for yourself and track your progress using debt repayment apps like Debt Payoff Planner.
4. Stay Accountable: Track Your Progress
It’s easy to be motivated at the beginning of the year, but staying on track is where many people struggle. As the months go by, it can be tempting to revert to old habits, especially when life gets busy. To keep yourself accountable, it’s important to track your progress regularly and make adjustments along the way.
How to Stay on Track:
- Use budgeting tools: Apps like Mint, You Need a Budget (YNAB), and Empower allow you to track your spending and savings goals in real-time. You can also set up notifications and alerts to remind you when you’re nearing your budget limits.
- Check in with yourself: Schedule monthly or quarterly check-ins with yourself to assess how you’re doing with your financial resolutions. If you find that you’re falling behind, don’t get discouraged—use this time to rework your budget or savings plan as needed.
- Find an accountability partner: Share your goals with a trusted friend or family member who can help keep you accountable. You can even turn it into a social activity by meeting regularly to review your progress and celebrate your successes together.
Making It Stick:
To stay engaged and motivated throughout the year, try turning your financial goals into a game. Use apps that allow you to track your progress visually, or set up small rewards for yourself when you hit key milestones. Another idea is to start a savings or debt repayment challenge with friends, where everyone works toward their financial goals together.
Bonus Tip: Boost Your Credit Score
A key component of financial health that often gets overlooked is your credit score. Improving your credit score can open doors to better interest rates on loans, credit cards, and mortgages, saving you money in the long run. If your credit score could use a boost, start by checking your credit report for errors and making a plan to pay down existing debts.
Quick Tips for Improving Your Credit:
- Pay on time: Late payments can significantly harm your credit score. Set up automatic payments to ensure you never miss a due date.
- Reduce your credit utilization: Aim to use no more than 30% of your available credit at any given time.
- Don’t apply for too much credit at once: Applying for multiple credit cards or loans within a short period can negatively affect your score.
At Carlyle Financial, we’re committed to helping you achieve your financial goals for the new year. Whether you’re looking to buy a home, refinance, or simply improve your financial habits, our team is here to support you every step of the way.
For inspiration, check out these resolutions from Mark Zuckerberg, Mark Cuban, and Manny Pacquiao. What are your resolutions for the New Year?
So, what are your resolutions for the new year? Let us know, and we’ll help you create a plan to achieve them! Here’s to a prosperous and financially healthy new year!