There is one common resolution that most people make at the beginning of every year: ‘Save money’. But why is this that every year this plan is made? Some of us still hope to reach this goal, while others have given up on their dreams of saving money for a rainy day.
It is clear that many of us still need to achieve our financial goals as a result of creating big savings goals for ourselves. It is often thought that if I refrain from eating out in restaurants for dinner, do not spend on selected luxuries, and make a budget, I will be able to save a lot of money. Thus, this thought often encourages people to procrastinate on this resolution.
James Clear in Atomic habits stated that “Small habits don’t add up, they compound; Tiny changes, remarkable results”. Well, this year why don’t we start small, instead of going big?
Why can’t most people keep up with their new year’s resolutions?
Are you aware that only 16% of individuals keep up with their resolutions? The majority of people give up within one to six weeks of starting. It’s also interesting to note that many of these resolutions are repeated year after year since they weren’t successful in achieving them.
The most common reason people give for not sticking with their resolutions is that they don’t have time. They lack these 3 things in their resolutions, which is the real reason:
- Insufficient planning and unclear goals led to their failure.
- Resolved tasks were not completed or unrealistic goals were set.
- Despite following their resolutions for a while, many people fail to evaluate their progress and therefore fail to maintain consistency.
In this blog, let’s unwind on ways to stick to financial resolutions this 2023!!!
Setting a savings goal and achieving it
The most important thing that you can do when it comes to setting and meeting a savings goal is to set a savings cap that you can reach.
When you know that you will only be able to put aside a small portion of your salary each month, there is no point in trying to save thousands of pounds if you are not going to be able to do it.
Rather than focusing on saving money, it is more important to set a goal that fits into your lifestyle. The best way to determine what you can afford is to track what you spend on average in a month and determine what your essential outgoings are based on that. For example, renting a home, paying gas and electric bills, making car payments, traveling, or whatever else you’ll need to budget for regularly.
Knowing your essential monthly expenses will help you figure out how much you can put into savings each month, while still ensuring the essentials are covered.
Before you buy anything, the first thing you should be asking yourself is whether or not you actually need what you are about to buy. If the answer to this question is no, then you should put the item down and walk away from it. As challenging as this is, once you get used to it, you’ll find that your spending habits are already starting to change organically as a result.
Managing your debts
Debt repayment can seem overwhelming when you don’t know where to start. Although saving and investing more in 2023 is a noble goal, carrying high-interest debt could leave you working against yourself every month.
The first thing you could do is target any debts that have a high-interest rate. It makes sense to resolve these debts first because interest means you pay more. You might have to wait a while before you can rid yourself of your debt, but clearing it will improve your credit score and save you money in the long run.
When it comes to credit cards, make sure you don’t max them out. Always aim to pay off your credit cards as soon as possible and don’t spend more than 30% of your limit at any one time. If the billing date is of 15th of every month, make sure you don’t use your card before or on the 15th as that amount will get added to your billing date, leaving you with minimum days to pay off your bill.
It is a harsh reality that meeting your bills often requires you to sacrifice other luxuries. The long-run benefit, however, is that you won’t get into unnecessary debt by not paying your bills on time.
- Starting Investing
Make a resolution to make smart investments this year that will help you achieve your financial goals and make the most of your hard-earned money. With macroeconomic fluctuations and market volatility causing the financial markets to ride a roller coaster this year, it’s becoming increasingly difficult for investors to choose which mutual fund scheme to invest in.
Prior to investing, you must evaluate the appropriateness of the investment avenue in light of your age, financial status, risk profile, investment objective, financial goals to be achieved, and the investment horizon in hand. The reason for this is that every investment avenue presents a unique risk-return trade-off.
The concept of a systematic investment plan (SIP) is to invest regularly and systematically (daily, monthly, quarterly). A SIP allows you to invest in mutual funds of your choice according to your suitability in a hassle-free manner. They can be used to achieve different financial goals, from buying a car to building a retirement fund, as well as children’s education or wedding expenses.
Remember to track your investments in your portfolio along with investing in worthy mutual fund schemes. In the same way that the market is dynamic, so are your financial needs. Thus, periodic review of your investments is important for mitigating risk and maximizing earnings potential. With the help of a financial advisor, you can eliminate underperforming holdings and maximize diversification by allocating assets across all asset classes (equity, debt, gold, real estate, etc.) with proper asset allocation through a good portfolio review.
Do not let your new year’s resolution slip from your mind if you have already made one. The time has come for you to take responsibility, show discipline, and stay focused on your goals. Make your dreams a reality by focusing, manifesting, and taking action.