The holidays are now in our rear-view mirror as the new year is upon us. Naturally, many people are feeling self-reflective and are re-evaluating some of their life choices – maybe it has a little bit to do with that smoking credit card burning a hole in your wallet from all the holiday spending.
Luckily, 2018 is a brand-new year; it’s a chance to start anew and curb some of your less desirable habits. This week I’m talking about your finances.
You see, most people know they have financial issues they’d like to remedy, but a lot of us don’t exactly know where to start. And since the vast majority of people fail to stick to their resolutions, you’ll need all the help you can get.
What I have for you in this article is a list of financial New Year’s resolutions you should make this year, followed by a cheat sheet that will help you follow through. The content in this article should give your all the ammunition you need to make 2018 a better financial year than 2017.
Here’s to a prosperous 2018!
What kind of goals should you make?
1) Decrease your debt
According to the Globe and Mail, the average amount of consumer debt – does not include a mortgage – in Canada is $20,967 and non-consumer debt, which does include your mortgage, makes up 163% of disposable income. In the US the average debt per indebted household is more than $131,000 (NerWallet analysis). With this data in mind, paying off high-interest consumer debt – credit cards and personal loans – should be a top priority.
2) Spend less
78% of people live paycheck to paycheck (Career Builder), and, according to the same report, this includes 1 in 10 making $100,000 or more. Some of this can be blamed on an inflated cost of living without a matching increase in income. But, based on the consumption of consumer goods and surmounting consumer debt, some can also be explained with frivolous spending. 2018 is your year to tighten up the purse strings and cut back.
3) Earn more
What’s your passion? Maybe starting your own business and working for yourself has been at the back of your mind for years – start now!
The best way to eventually become your own boss, while also supplementing your current income: a side hustle. With a side hustle you can get involved in something your truly passionate about and build your self-employed income while you still have the safety and security of your day job.
There’s plenty of opportunities out there (I’ve even talked about multilevel marketing on this website). For more ideas, check out this list by Side Hustle Nation: 99 side hustle business ideas you can start today.
How do you make your goals a reality?
Identifying what you need to do is great, but the more important part? The how. How do you turn a simple goal into a reality? With these 6 steps.
1) Define a clear goal
Be clear; be concise; be specific. It’s not good enough to say, “I want to decrease my debt,” instead, you should say, “My credit card right now is at $5000, I want that to be $0.”
2) Turn a negative into a positive
It’s a little trick from Dr. Will Meek, a psychologist in Vancouver, Washington. By wording the goal as a positive, you prevent your brain from thinking it’s giving something up. For instance, saying, “I’m going to spend less by not spending money on frivolous things,” could be replaced by, “I’m only going to spend money on things I truly value.”
Do less. Everyone comes into the new year thinking they will be able to completely overhaul everything in their lives; wrong! If you really want to make successful change, focus on one to three things that are really important.
This way you don’t spread yourself too thin and you have the energy to commit to ensure your success.
4) Track your progress
Luckily, most financial goals are measurable because they involve numbers – nothing could be simpler. Because your goals are measurable, you can track your progress and define landmarks: this is essential for maintaining motivation.
Our goal was reducing our credit card from $5000 down to $0. We can break this down into 10 $500-dollar payments over the year, turning a mountain into a mole hill. Plus, we get the added satisfaction of watching ourselves make our goal a reality in real time as the balance decreases.
5) Make sure it’s realistic
This kind of goes hand-in-hand with not trying to do too much all at once. Telling yourself you’re going to pay off the mortgage on the house you just bought last year in 2018 is just setting yourself up for failure.
6) Give it a timeframe
This means they have a deadline. Again, going back to our credit card example: We have 10 $500-dollar payments to reach our goal of reducing the balance on our credit card to zero. If we do one a month we could have it all paid down by October (write this down and make it a hard deadline for yourself).
Stick to this list and you stand a much better chance of succeeding in making your financial goals a reality and avoiding the majority of people whose New Year’s resolutions are just that: resolutions.
One last thing: when you’ve accomplished your financial resolution for 2018, give yourself a reward! You’ve earned it.
Let me know about your resolutions in the comments, and if you’d like some more advice, please contact me; I’d love to hear from you.
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