Whether it’s exercising more or kicking a bad habit, sticking to our New Year’s resolutions can be difficult, and research shows we generally don’t last too long.
By mid-January, most people have given up on their New Year’s resolutions, according to the stats.
And when it comes to money, we’re not much different.
“This ‘resolution fatigue’ is a real thing, but there are ways to keep making progress even when you start to feel worn out.
Here are some financial resolutions that you should aim to achieve this year:
2. UPDATE YOUR BUDGET
If it’s been a while since you last edited your budget (or even created one at all), I would suggests making a budget that fits your current lifestyle and prioritizes you.
Remember that budgeting shouldn’t be all about restriction, it should give you guidance on how to manage your finances.
(Free course: How To Budget Like A Pro)
4. TRY THE 10C CHALLENGE
Every day you set aside an amount equal to the day of the year, times 10c. This is a saving strategy that is easy to do. Only small amounts are needed every day – also, saving becomes a daily habit.
Here is how it works:
Lets say you started on the first of January, you will have to save 10c for the first day,
On the second day, you times it by 10c, equals to 20c, (Day 2 multiply by 10c = 20c),
You repeat the cycle until the last day of the year, which is, Day 365 times 10c equal R36.50.
Make sure you keep the money in a high interest earning account. Avoid using the Tax free savings app.
Another savings technique involves you saving as much as you spend for one week (or more).
the daily amounts that you need to set aside are small, and you can often easily rummage through your bag or trousers to get the target amount.
If you don’t have loose cash on hand, some savers have a weekly ritual to transfer a weekly amount to reach their goals.
6. INCREASE YOUR ANNUAL RETIREMENT CONTRIBUTION BY 1%
Investing a certain percentage of your income in a retirement plan every year helps you to create a secure financial future. Experts at recommend a 15% yearly contribution target, including any employee/employer contributions.
While 15% might be higher or lower than what you can currently afford, it doesn’t hurt anyone to bump up their retirement contributions by 1%.
Speak to your human resource department and ask them to increase your retirement contribution percentage when you receive your next salary increase.
The money will be deducted before it hits your bank account, so you will not even miss it.
MAKE SURE YOUR GOALS ARE SMART
Start by making a list of your goals; the things that you are saving for, or the financial outcomes you’d like to achieve. Don’t stop here though, because just listing your goals without setting clear boundaries for each one will only leave you feeling demotivated and disappointed.
SMART goals are Specific, Measurable, Achievable, Realistic and Time-bound. Put a monetary value to each item in your list and set a date for each goal to be achieved by. If your goal is to save for your child’s education, find out how much the first year will cost, and aim to have saved that amount before your child starts school.
When you have a specific, realistic picture of what and when you’re saving for, the final step here is to prioritise your goals from most to least important.
If you still want even more help following your resolution, buddy up. Choose a partner to save with, and report progress to them regularly. You can even join a money-saving support group if that’s your style.
TRACK YOUR SPENDING
Before you can start saving towards your goals, you need to be familiar with your usual spend. 22seven allows you to categorise your expenses and make notes on each transaction so that you know exactly where your pay cheque goes.
Many people are unaware of what they really spend their money on every month because all those small expenses add up quickly. By tracking your expenditure, you will know where you can free up some money by cutting down on unnecessary spending and reallocating the funds to your savings pool.
(Free course: How To Budget Like A Pro)
REWARD YOUR HARD WORK
It’s important to remember that setting financial goals and achieving them is a marathon, not a sprint. Don’t put too much pressure on yourself to reach all your goals in one go. Start slow, perhaps choosing just one goal to focus on at first. Then you can slowly increase them as you become “fitter.” Make sure your financial resolutions are realistic for you, so that you can stay motivated and committed to reaching them.
If you’re working on a year-long savings project, twelve months is a long time to wait for the payoff.
To keep yourself motivated, give yourself a small reward every time you hit a milestone. Reward doesn’t have to mean spending money or spending a lot. If you’ve met your savings goal for the month, maybe celebrate by binge-watching a favorite TV show. Or if you and your partner gave up restaurant meals for a whole month, an ice cream date could be just the encouragement you need to keep going.
Research shows that we are more likely to stick to long-term goals if we get immediate rewards along the way.
PUT MONEY AWAY FOR EMERGENCIES
Any attempt at building up financial stability starts with an emergency fund.
There is no point in focusing on paying off debt without building up a buffer that prevents us from falling back into debt again.
The rule of thumb is to have at least three months’ expenses set aside, but for now, make your resolution to have at least R15 000 in a savings account set aside for real emergencies.
(Free course: How To Build An Emergency Fund)
BE SMARTER WITH YOUR DEBT
Create a solid repayment strategy and knowing how to prioritize paying down your debts, you’ll be making a dent in your balances before you know it.
Debtsafe and Debtresue can help you create a debt repayment plan that works for you. They will be by your side until the end.
Being debt-free starts with a single step. Select just one, relatively small, debt and pay it off.
This will be easier to achieve than tackling several debts at once and will provide you with the motivation, and cash flow, to target the next debt.
Remember to close the account or cut up the card once that debt is paid, otherwise it is too easy to access the credit again.
(Free course: How To Pay Off Your Debt)
AUTOMATE YOUR FINANCES
From your bills, to your savings and investments, automate as much of it as you can.
When you set up auto pay for things like your credit card bill, your car payments and rent, you can count on never having to pay a late fee. Your payment history is the most important factor that determines your credit score, which is why paying on time should be a high priority.
Select an investment option and commit to a monthly contribution into that investment. Work out the monthly amount you need to invest in order to reach your goal on time. If you can opt to automate your monthly debit order, always do that, and set the date soon after payday. This will stop you from being tempted to spend the money on other things throughout the month.
You can start investing for as little as R350 a month. just start with a low-cost, tax-free savings account offered by a unit trust company or an exchange-traded fund such as Satrix top 40. Use this link to sign-up with Easyequities. Easy equities is a stock broker that allows you to buy JSE listed companies.
(Free courses: Investment guide series)
START A CONTIGENCY FUND
An emergency fund is there for those unexpected life events, but we also have day-to-day expenses that push our finances beyond our budgets.
For example, a holiday or buying new furniture.
These are not necessarily items you can just pay for from your monthly cash flow, but they can be planned for.
By building up a contingency fund you don’t have to pull out the credit card or take out a personal loan when you want to spend on nonessentials.
UPDATE YOUR WILL
Everyone needs to have a will, even if you have no financial dependants. There will still be family or friends responsible for winding up your affairs should something happen to you.
A will makes it a lot easier for them. If you haven’t updated or even looked at your will in a few years, you need to read through it and see if anything needs to be updated.
There are online wills that meet requirements for a small, uncomplicated estate, but if you have children or several assets, it is worth seeing an expert to get the right advice.
GIVE YOURSELF A FINANCIAL CHECKUP
Now that we’re back from the holidays, prioritizing your health might be at the top of your resolutions list. So just like you go to the doctor for your annual checkup, consider doing the same for your finances — these recommendations for improving your financial wellness are a good place to start. From there, just as your physician would do, ask yourself some questions about your financial health: Do you have a budget? Is your emergency fund healthy? Do you have a plan to pay down debt? How are your retirement savings looking? If you’re not happy with any of your answers, a financial advisor or financial coach can help you get on the right track.
Make some time now in your diary to commit to putting together a list of all your investments, policies and bank accounts.
Include the full name of the product and reference number.
This will give you an overall idea of what investments and policies you have, and it makes it easier for your family to handle your finances should something happen to you.
You may even discover a savings account you had forgotten about.
Two other tips I recommend:
BETTER YOUR MONEY HABITS
In January, exercising more and eating healthier go hand-in-hand, which makes it a great time to adopt some new money habits as well. But just like a sustainable diet makes room for some indulgences, good money habits include the occasional splurge. Get started by flexing your financial muscles and reading up on how making small changes to your spending, such as stretching out your grocery budget or lowering your monthly bills, can help you save more, reach your financial goals sooner and make room for the things that are important to you now.
EARN MORE MONEY
In 2022, the “new year, new you” mantra still applies. So if you’ve set your sights on increasing your streams of income, enroll in our free course, how to create multiple streams of income.
The secret to a successful resolution is to keep it simple and to break it down to something manageable. Financial change starts one step at a time. Instead of saying “I am going to be debt free,” rather select one debt that you are committed to paying off in 2022. If you aim to start accumulating wealth, decide how much is reasonable to commit and take the time to fill in the paperwork – believe me, filling in forms is the hardest part of the commitment!
Armed with these tips, you should be ready to take on any obstacles you hit on the road to money saving success. Happy New Year — and let’s get saving!
