It’s not too late to set yourself up for financial success in 2024!

It’s almost the end of January, and if you are a typical human your New Year’s resolution about your finances has failed. That does not mean that you can’t try again to set yourself up for success!

Here is my simple 3 step process to help you accomplish some very doable things that will make a large difference over time.

1.    Evaluate the past year.

2.    Set some goals that are guaranteed not to fail.

3.    Plan ahead.

 

Evaluate the Past Year

Ok, I know this seems super boring. It’s not glamorous, and not fun, but if you can do it I promise it will make a huge difference.

Who - You! And if you are married this should be a joint activity.

What - 1st talk about what went well with your finances. This is a great way to recognize the wins, and identify what works for you when it comes to money. Identify what made that process work. Maybe you can use that same technique in a money struggle area. Keep doing the things that are working! 2nd have an honest tough conversation about what went wrong, and what you can do to change those things. Don’t list more than 3 things. It will overwhelm you.

Where – I trust your judgement here – but it should be somewhere you won’t be interrupted. Plan on this exercise taking an hour.

When – Do this as soon as you can. The more mindful and proactive you are about your finances the greater your chances of successfully changing them.

Why – We so often ignore our money problems because they are scary, intimidating, frustrating, illogical, etc. The only way to change that cycle is to acknowledge what is going on. This simple exercise will help move you past stuck, and make some real progress!

How – After you have compiled your two lists choose one item from the money struggles list to work on. For real, just start with one. Identify 3 ways that you can improve this habit. Work on those things. If you are diligent it can resolve pretty quickly. If that happens pick another topic from the list and repeat the process.

I don’t want to downplay that money struggles are tough to resolve and can be very emotional. If you need help or support to work through this process, or ideas about strategies to break the habits schedule some time for us to chat.

*You can request the “Evaluate Your Finances” worksheet to help you get started. *

Set Some Goals that Won’t Fail!

• Increase your 401(k) contribution by 1%. If you can do more, do it!

• You will not notice the effect of this on your paycheck, but it will make a huge difference over time to your retirement savings.

• Set up automatic deposits from your checking account to your IRA.

• Have these come out every payday.

• $50, $100, it’s another small amount that you won’t really notice that will make a huge difference over time. (Again, if you can do more, do it!)

• If you are maxing out your contributions on both of these accounts send your deposit to a taxable investment account every paycheck.

• *These can fail if you stop the automatic contributions/deposits. Don’t do that!

Plan Ahead

Every year there are expenses that we have that we know about, but don’t prepare for. Too often we do not pay attention to the things that we can expect, plan, and save for. This causes overspending, or missing out because we ran out of budget. Let’s change that!

Areas where we generally spend more money than we planned, or miss opportunities to save:

Vacations – Determine how much you are going to spend on your vacation. Let’s imagine it’s $5,000. Save $5000, and then go. If you don’t save enough this year, go on a cheaper trip, or keep saving until you have the money. Do not put this on a credit card.

Cars – Determine what your ceiling is. (This should be a payment that you feel comfortable with and can afford. The dealership/bank will always qualify you for more than you should actually spend.) Only go up to the ceiling.

Homes – Same as cars.

Christmas – Determine what amount you want to spend. This can be per person, or a total. Save it. Keep to it. It is so easy to spend more than you think you are on Christmas. It is a huge budget breaker. Nothing says Merry Christmas like a huge credit card bill that sets you back right away for the New Year.

Birthdays – Don’t feel pressure because of other parent’s decisions. Pick an amount and keep to it.

Childcare – Use your FSA. Fund exactly what you need. Paying for childcare with pretax dollars won’t make you rich, but it really does make a difference.

Written by Christina Ferrer, founder and Financial Planner at BYBFinancai.