2014 is here!
So, 2013 is gone, and we have a brand new year stretching ahead of us, full of potential. I love looking ahead at a year with no mistakes in it yet. Let’s resolve to make 2014 our most successful year yet!
You’ve probably heard of various studies that prove that people who write down their goals are much more likely to achieve them. I think it’s even more basic than that:
… thinking about and writing down your goals is the first step in clarifying to yourself what they are.
A great book to check out is the recently re-published Goals! by the wonderful Brian Tracy. So many times we set goals for ourselves that are not really congruent with who we are. In Goals!, Tracy helps you narrow down your own values and beliefs, and then set goals consistent with them.
I propose the following ten financial resolutions for 2014:
1. FIGURE OUT YOUR FINANCIAL GOALS, AND WRITE THEM DOWN.
Make sure they’re “Smart” goals – Simple, Measurable, Achievable, Realistic, and Time-bound. A simplified example: “I want to be richer” is very hard to quantify (and measure). By contrast: “I want to have $2,000 in my emergency fund by December 31, 2014” is much easier to measure and develop a game plan for.
2. TRACK WHAT YOU SPEND.
Just like tracking what you’re eating will help you identify problem areas in your diet, tracking what you’re spending your money on will help you identify opportunities for saving and/or spending less. After a month, you can start to see a pattern. Multiply this by twelve – you might be shocked to see you’re on your way to spending hundreds of dollars every year on Starbucks or Amazon or the iStore.
3. PLAN FOR EMERGENCIES.
I’ve seen many people who are recovering from bankruptcy and severe financial straits due to circumstances like illness, job loss, and the like. It could happen to any of us, so one of your top goals needs to be your emergency game plan. How much should you have set aside for emergencies? Experts generally suggest about 6-12 months’ worth of expenses. It really depends on the type of work you do and what your safety net is.
4. SAVE MORE.
Living from paycheck to paycheck? Doing the tracking in step two means you should have an idea of where you can cut. Sometimes you have to be very protective of your goals. When friends propose an expensive outing, my friend and financial guru Marla Mac suggests the following in a recent Facebook post: “I’d love to spend time together. I’m saving up for an awesome [trip, car, downpayment, etc.], so let’s find something inexpensive to do that we can both enjoy.”
5. SPEND LESS.
6. PAY DOWN DEBT.
Review all your debt and find out where you’re paying the most interest. Each month, make sure you pay all your minimum payments on every single debt you have (NEVER miss payments with the intention of making up for it later, as this can really hurt your credit). Then, use extra funds to hammer away at the highest-interest debt and get rid of it. Move on to the next one, and keep going.
7. EARN MORE.
Is a pay raise not in your future? Then try ideas like getting a part-time job, selling stuff on eBay or Kijiji, or self-publishing and selling a book on Amazon to give you a jumping off point to come up with ideas for things that would work to achieve the extra earnings goal.
8. INVEST IN SECURITY.
In addition to the emergency fund, take a look at your financial vulnerabilities. For example, are you dependent on one person’s income (yours or a spouse’s)? What would happen if that income source was interrupted due to illness or death? Make sure you review your risks with a reputable insurance broker. People often think about life insurance, but you should also look at disability and critical illness insurance as well. They may be more appropriate for your needs.
9. GIVE SOMETHING BACK.
No matter how bad we feel financially, there are always others that need our help even more. Volunteer at a local shelter, help an elderly neighbour, resolve to drop money into the Salvation Army bucket when you pass by, or give money to Unicef – whatever is meaningful for you.
10. REWARD YOURSELF!
Decide on some rewards, and figure out what will be the most fun and motivating. Then work to deserve them!
Stay in touch… I’d love to know what your goals are, and how things progress throughout 2014. Here’s to a great 2014!
Image credits: “2014” image [c] by duron123 for freedigitalphotos.net and “goal” image [c] by Stuart Miles for freedigitalphotos.net.