Financial New Year’s Resolutions you can keep

It’s a new year and a new me. The first month of 2018 almost over, how are you doing with your New Year’s resolutions? On average only eight percent of people actually keep their New Year’s resolutions, and it’s no wonder why–many are too broad or unreasonable.

If we take a look at the top resolutions for 2018 there are no surprises:

  • Eat healthier
  • Exercise more
  • Save money

Well, I can’t really help with first two (even though after watching TB12 Tom vs Time, I am certainly motivated) one thing we know a thing or two about is preserving and growing your wealth. While most New Year’s Resolutions fizzle out by January 30th, let’s set some actionable goals to help you stay on track financially in 2018 because the only thing you want fatter by next New Year is your wallet.

We don’t plan to not save money, but if we don’t have a plan then there is a war going on between your debit card and the dozens of things you want to buy. We’re bombarded with ads, whether it’s on Facebook, Spotify, or the train ride to work. So the first step is knowing how to set a barrier between your wallet, and what you’re told you need.

Pay yourself first

No matter what your job, salary, allowance, source of income, make a commitment that a fixed percentage goes into savings. Treat it like a bill: your rent, electricity, or Netflix subscription for example. It doesn’t have to be a large percentage, but make it something that is both ambitious and realistic.

Start with a budget that accounts for the many expenses in your life: student loans, housing (rent or mortgage), insurance (health and car), etc. Not sure where to start? Fortunately, we provide a digital tool that you can link to your bank account and credit cards that fill in a budget for you so you can see where your money is going, though there are several other options as well.

Now that we have a budget, the next step is to make a commitment that each paycheck you will pay yourself a sum every time. You don’t have a choice to pay FICA, your taxes, health insurance, why not put you and your financial goals on the list.

Paying yourself first and setting aside a fixed amount for savings is probably the simplest yet most effective way to save your hard earned money and build your future.

Plan ahead for your dreams

You’ve got your finances in order with your bills covered, your savings secured, now it’s time to divy up the rest.

What goals do you have right now? Are you saving up for a down payment on a home? Or maybe a European vacation with college friends? Perhaps a wedding is in your near future. Whatever it is, you have a better chance of reaching it if you have a plan.

With your expenses covered and a bit added to savings, you have the wiggle room to save for those long-term goals. It’s not money you need to feel guilty about spending, because it’s money that is free to be spent for whatever you wish, as long as you have a plan in place and are committed to it.

I love nice things, who doesn’t. Whether it’s a home renovation or a new wardrobe, we want you to be able to succeed and hit your savings goals while treating yourself to a bit along the way. This year, in addition to padding your savings, set a few financial goals for yourself.

Start putting money into your 401k

Do you have a job with benefits? You probably have a 401k option as well. Now the real question, are you putting any money into it?

It will be hard to find a better option to invest than your company 401k. Not only does the US Government subsidize your return, but because you don’t pay taxes on that deposit if your company matches your contribution that is free money. Between the two this can add up to a 40% – 60% return every time you make a deposit. Seriously, what better investment is there than one with that kind of steady return?

It can be a bit difficult to look at your paycheck and subtract x%, however dedicating 4%, 8%, or even 10% from the top and committing that to your company’s 401k plan is an excellent way to save and set aside wealth for the future. Don’t look at it as giving up money you could be spending now, instead look at it as money you can live on down the line.

Know your risk, and plan around it

Your 401k plan may have an option to set an investment strategy, or perhaps this is the year you decide you want to try your hand at the markets. After saving for yourself, paying off your bills, and putting a bit towards some long-term goals you may find you’ve got some spare cash at hand.

You have investment choices that range from 100% guaranteed to a lottery ticket reach for the moon in performance. For example, compare US Treasury Bonds to Bitcoin (I wonder which ones look more attractive now as opposed to a month ago).

Before you place any bets on non-guaranteed assets, it’s important to know where you stand where it comes to risk. Taking a complete a risk analysis will help you determine your emotional ability to handle the ups and the downs of the market. This allows you to plan your investments in a way that helps you sleep at night, prevents your hair from being ripped out, and your nails from being chewed off.

Are you saving for retirement or buying a home or condo? Then plan the cash flow and duration and choose investment options and expected returns that equal your investment horizon? Don’t buy Snapchat at an IPO with the money you need next year for a new car, or a condo, it that may be the worst time to sell the position and you could take a huge loss.

Going Forward

Armed with these resolutions there is no reason you can’t hit your financial goals in 2018. By saving more, setting realistic goals, and investing in your future you’ll find that you can end the year on top and on a path to financial security and even growth.

You don’t have to have a genius mathematician at your side to put your money to work and build a future, you just need a bit of persistence, dedication, and consistency.