Goals for the new year often revolve around taking something away. We want to lose weight so we eat fewer treats. We want to save money so we quit going out to eat. It seems like most of us think the only path to achieving what we want is through deprivation. The only way we can get ahead is to quit.
But what if we flipped that switch this year? What if instead of focusing on all that we need to take away, we focused on adding smart habits instead? This year replace quitting an old habit by starting a new one.
Start an emergency fund
If you don’t have one already, this year begin saving for an emergency fund. For those paying off debt, it’s smart to save between $1,000 and $2,000. Most hiccups in your household finances fall in this price range. From major car repairs to replacing a household appliance, you need cash on hand to handle a crisis without credit. This sum should get the job done.
Paid off all your consumer debt already? Then consider saving three to six months of household expenses. In the case of a major emergency such as a job loss or major accident or illness, you’ll be able to stay afloat.
Track your income
Whether it’s sporadic or regular, focusing on the positive income flow into your household helps determine your direction in the months ahead. Especially when you’re beginning to budget, it’s smart to enter the positive numbers first. Use last year’s figures to get a good prediction of what you’ll bring in. But also be meticulous in your record keeping for this year. The next year version of you will be so grateful.
Chart your debt pay-off progress
Visualizing the future fuels your success. This year, each time you make a payment toward your debt, color in a thermometer or deduct it from the total in a running total. Post the visual representation in a place where you encounter it each day. You’ll be motivated by seeing what you accomplish every month.
By the way, if you don’t know how much money you owe, now’s the time to find out. Be bold enough to sort through each account and get a good handle on the total debt load. Don’t be afraid. You’ll be able to take on the beast better if you know just who you’re fighting.
Buy only what you love
This is your year to focus on purchasing only the items you love. Rather than settling for something because it’s a bargain or because you can make do with it, focus on only buying the things you truly want. Make a list of the items you need (or maybe even want) and carry it with you on a notepad or a note in your phone. When you’re tempted to make an impulse purchase, look at your list and remember your goals. You’ll likely put back the extras and continue to save toward the love list.
Begin automation
Make the most of your bill automation options this year. When you can, have businesses automatically withdraw your payment from your account. You’ll eliminate late fees and bring peace of mind knowing your bills are being paid on time. Many times, you’ll also gain a benefit like cash back or a percentage reduction when you utilize these tools.
Add a stream of income
If you’re going to gain leverage this year, you may want to consider taking on extra work. An additional revenue stream could help you achieve your dreams. Whether you freelance or take on a second traditional job, this may be a season when you need to hustle a bit more. While moving beyond your current employment situation may seem a little scary at first, the pay off gets you that much closer to your goal.
Stop focusing on what you lack and can’t do. Begin focusing on what you can do and already have. Your perspective shift can create positive change and move you closer toward to where you want your finances in the months ahead. Instead of taking away something in the new year when it comes to your money, add the practices proven to provide success.
Greenwood resident Cherie Lowe and her husband paid off $127,000 in debt in four years and now live debt-free every day with their two kids. She is the author of “Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After.” Send questions, column ideas and comments to [email protected]
