What are your New Year’s Resolutions? Have you set your goals yet? We often hear our clients want spending power so they can pay off debt, take more vacations, or send their child to summer camp.
Before you can achieve your goals, you need to set them. Ambiguous goals like “save more money” aren’t very effective. First, identify your why. Why do you want to achieve this specific goal? Do you need to save for your child’s education? Are you close to retirement and need a little extra money to secure your future? These specific reasons act as motivators to change your behavior.
Second, set achievable and trackable goals. How do you eat an elephant? One bite at a time. By creating smaller goals that build towards the larger ones, it helps build momentum and keeps you on track. If you need to reduce your credit card debt by $1,000, having the goal of spending $10 a week makes it easier to do.
Actively saving money is one of the most immediate changes that can increase your spending power. Here are a few simple ways to do that:
- Brew your morning cup of coffee at home
- Walk as much as possible to save on gas
- Use a reusable water bottle instead of buying plastic water bottles
- Commit to “no spend days” throughout the month
To achieve your New Year’s resolution, sometimes you need to delay gratification and learn to trust your future self.
Beef up your emergency funds
Roughly 54% of Americans do not have enough in their rainy day fund. When (not if) something unexpected happens, you’ll have to use credit and loans if you don’t have liquid assets available. Set a goal to add at least one more month of expenses to your emergency fund.
Adjust your tax withholdings
A fat check each April might be fun, but it means you overpaid Uncle Sam during the previous year. Even worse, you earned zero interest on that loan to the IRS. Adjusting your tax withholding rate can put extra money in your pocket each paycheck.
Automate as much as you can. Most banks have automatic saving plans that contribute a fixed rate each month. There are plenty of apps that help you set a budget, track spending, and save more each month.
Improving your lifestyle not only benefits your health, but can help your wallet too. The average person spends about $4,342 on health care each year. That’s 8% of the average income!
Whether saving more money, making more money, or organizing your finances; changing your behavior is the first step. After you’ve committed to making a change, we’re here for you. An important thing to remember this New Year is we can only help you if you let us help you. Major life decisions can have huge impacts on your taxes. For example, if you’re selling your business, we can help structure the deal to minimize your taxes. Are you getting married? We can help you and your significant other combine and organize assets and help you make a financial plan.