Every year, the majority of individuals make a New Year’s resolution. Some resolutions are meant to help people grow personally, while others are made to assist people improve their financial situation.
Have you failed to keep your New Year’s resolution to save money? What can you do to get back on track? The issue arises when you establish a big goal without a strategy for achieving it. Large goals are more difficult to stick to and are more likely to discourage you.
In this article, we advocate for more modest New Year’s resolutions, such as tiny lifestyle modifications that will save you money. Small modifications made over time will result in large, ingrained behavioural changes.
Here are some typical ways people can stray from New Year’s savings goals, as well as simple fixes to get back on track:
Glitch No. 1: You never started
All of your time at home over the last year may have inspired you to save for a fantastic post-pandemic vacation, but you never created a concrete plan. Recognizing that you’ll need some cash for your dream vacation is only the first step.
The fix: The solution is to make your savings objective more clear. Goals that aren’t tied to something substantial are the ones that are most readily broken. Setting weekly and monthly financial objectives might help you ensure that you’ll have enough money for your vacation.
Glitch No. 2: Your goal wasn’t realistic
You may have set aside too much money or given yourself insufficient time to achieve your goal. Making a drastic resolution can lead to disappointment. It’s the equivalent of making a New Year’s goal to start running – and then attempting to run a full marathon on January 1st.
The fix: Begin small. You may not be able to save 20% of your income just now, but a few early wins will give you confidence and a sense of accomplishment. And, whether it’s saving more of your salary, retiring earlier, or something else, achieving little objectives can help you get closer to larger ones.
Glitch No. 3: You went over your budget
Another fantastic strategy to save money is to create and stick to a budget. It may not seem like it will save a lot of money, but it will. Seriously, once you instruct each dollar where to go, you’ll feel like you’ve been awarded a raise!
While eating out is quick and easy, the cost can soon pile up. This is especially true if you eat out several times per week or day. Who hasn’t had a cup of coffee in the morning, lunch with buddies, and then happy hour with coworkers? This can cost upwards of $40 for a day’s worth of food.
The fix: Make your savings automatic. Make it as simple as possible to save. Regular, automatic deposits into a separate high-yield savings account are recommended. Savings aren’t reliant on sticking to a rigid budget and hoping for a surplus this way.
Many Australians now use a savings or budgeting software to combine all of their average household’s expenses and deter them from making impulsive purchases.
Glitch No. 4: You didn’t prepare for the unexpected
Perhaps you blew your savings goal due to unanticipated car problems or a home maintenance. If you didn’t budget for unforeseen expenses, you probably spent money that was supposed to go towards your objective.
The fix: Prepare for the unexpected. Set aside some money for life’s unforeseeable calamities. Keep an emergency fund distinct from your specified savings objective to handle these unexpected charges and expenses.
Have a strategy in place for any pleasant surprises you may receive, such as a tax refund, a relief check, or regained lost monies. Make a rule that any windfalls go towards expanding your emergency fund or are split between an emergency fund and vacation savings, for example.
Disclaimer: This article is not intended as legal, financial or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature you should seek advice from a qualified and registered Australian legal practitioner or financial or investment advisor.
