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New Year, New Money Habits

Did you make a resolution to save money recently? You’re not alone. Financial goals top the list of America’s most popular New Year’s resolutions, right alongside eating healthier and exercising more. Unfortunately, as many of us know firsthand, it’s easy to make resolutions. It’s much harder to actually keep them.

But don’t go throwing your financial resolution list into the trash yet! Setting goals is an important step in developing healthy financial habits. And it’s these habits that enable you to save more, stick to your budget and achieve financial stability.

Here are just a few of the positive financial habits that you could cultivate this year:

1. Prioritize What’s Most Important.

Before you start making budget spreadsheets and filling out applications for a second job, make a list of your top three overall financial goals. Think long-term goals such as buying a home, saving for retirement or being completely debt-free. These might not be the sexiest goals, but they are important to keep top of mind whenever you’re debating a splurge.

Next, list your goals for just this year. Are you saving up for a trip to Spain with friends? Trying to pay off your store credit card? Do you want to put $1,000 in a savings account, money market or CD? It’s crucial to be specific with these goals and know exactly what success would look like.

In the examples above, your concrete goal list might be:

  • Save $1,300 by November 1st for airline tickets to Spain
  • Completely pay off $350 Target Credit Card balance by April 30th
  • Deposit $1,000 into money market account by December 30th

To set yourself up for success, choose realistic goals and time periods. Mini-goal setting isn’t a “set it and forget it” task, so make it a habit to reevaluate mini-goals once a month and bigger goals once per year.

2. Make a Budget. And Write It Down Somewhere You Can See It Every Day.

Too many people spend the time creating a monthly budget only to never look at it again! Your monthly budget should be a living, breathing document — whether you use a Google spreadsheet, a budget tracking app or your favorite sketch pad (we highly recommend you put that last one into digital form, though)!

Track your weekly progress on sticking to your budget and flag any trouble areas so that you can revisit them at the end of the month. Do a monthly check-in near the end of each month and revamp your plan as needed.

3. Pay Yourself First. Also, Do It Responsibly.

What does this commonly recommended financial habit actually mean? The idea isn’t to get your paycheck and then take out hundreds of dollars just because you want a new purse, signed baseball jersey or the latest video game system. Especially not before your bills are paid!

Paying yourself first simply means sticking to the “spending money” amount that you designated in your monthly budget. If you’re using the 50/30/20 rule, that would be 30% of your take-home pay — $150 out of a $500 paycheck, for example.

Using paper cash is the easiest way to ensure you won’t go over budget, but if you want to make purchases online or by debit with your spending money, you could open a free checking account just for this purpose.

4. Set Up Mantras to Help Curb Your Spending. Ohm Money Madness Ohm…

Rather than “rules,” which can feel restrictive, these are short declarative statements that you can say to yourself as you go about your day-to-day routine. Choose one or two goal-oriented statements to use and remember them whenever you’re tempted to splurge.

For example:

  • I will only splurge on entertainment or dinner out after my monthly bills are paid.
  • I will not buy anything new for 30 days.
  • I have delicious food at home, so I do not need to eat out.
  • I don’t need to say yes to every social invite, especially if it’s going to cost money.

5. Get Advice From the Experts. That Means Reading, Watching and Listening to Their Wisdom.

While some of the basics are covered here, this is by no means an exhaustive list of healthful financial habits. Reading articles or books and watching YouTube videos from modern-day finance gurus can give you a new perspective on familiar financial topics.

Here are three popular faves to check out:

  • For the Finance Newbie: Get a Financial Life by Beth Kobliner
    A great introduction to managing your money in your 20s and 30s, this book covers everything from buying a car and getting credit cards to paying off student loans.
  • If You’re Focused on Paying Debt: The Dave Ramsey Show podcast
    It’s tough not to feel inspired by the seemingly endless number of Ramsey fanatics screaming for joy on-air after they paid off their last cent of debt.
  • For Those Craving Financial Independence: Stephanie O’Connell Rodriguez
    A money expert featured on CBS News, The Dr. Oz Show and in The Wall Street Journal, O’Connell Rodriguez focuses on steps to take to get to the amazing lifestyle you dream of.

Whew! We know that’s a lot to take in but remember — you don’t have to add all of these new habits at once.

Take some time to digest all of the fabulous new money habits you could start following this year and pick a couple that speak to you. Focus on your new money habit… and then keep going. And going!

If you’ve ever heard that a habit only takes 21 days to get hardwired into your brain, you can let that go. According to science, it takes more like 66 days (and sometimes years) to truly form a habit. So, give yourself plenty of time to form each new habit. The longer you keep demonstrating positive financial behavior daily, weekly or monthly, the more likely it will become second nature to you!

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The material presented here is for educational purposes only and is not intended to be used as financial, investment, or legal advice.