Financial resolutions are easy to make but can be hard to keep. An unrealistic budget might be why many people abandon their money goals by February. However, a simple pre-budget strategy could help you stay committed all year long.
Before setting financial goals for the new year, tally your credit card and loan balances. The total might interfere with your ability to budget for other goals. For example, high minimum debt payments could stall an aggressive plan to build a three-month emergency fund balance by next December.
While the new year might motivate you to make drastic changes, slow down. Spend the next 30 days keeping records of every dollar you spend. This can help identify money patterns, such as impulse purchases, which might make it more difficult to achieve your goals.
Canceling subscription services and memberships you no longer use makes sense. But what if you use them regularly? Consider switching them out for a low-cost alternative. For example, ad-free entertainment services can replace on-demand streaming platforms that receive revenue from advertisers, not subscribers.
Overly restrictive budgets are the cousin of unrealistic budgets. Give yourself permission to enjoy your hard work by including small financial splurges in your budget. Create a “fun money” category so you can enjoy a latte, restaurant meal, or matinee movie without interfering with your other goals.
Whether you choose to follow zero-based budgeting, the 50/30/20 rule, or another method to manage your money, start with an honest assessment of your current situation. To help you get started, Wescom offers a series of budget and savings calculators, so you can set spending habits that allow you to achieve your goals while enjoying day-to-day living, and ultimately make your financial resolutions last beyond the new year. Visit wescom.org/financial-calculators to get started.
