According to the Fidelity 2014 New Year Financial Resolution Study, 54% of Americans say they, “typically consider resolutions concerning their finances.” That comes as no surprise since we’re currently on the upswing of a economic depression.
Fidelity has also published the top financial New Year’s Resolutions of 2014. I’ve outlined them here and added a few more popular choices that I found while searching the world wide web (for those born in 2004, that’s the internet). I hope these popular resolutions will help you create your own this year. I know I’ll be adopting a couple of these myself.
1. Save More Money
It’s no wonder that this this the most popular resolution on the list — it’s not actionable. This might as well say, “become rich.” What does this mean? How will you know if you’re successful? If you save $1 more than last year, then you’re a winner? Bullshit!
Let’s dig into this a little deeper and come up with a few ideas to make this resolution more actionable. You can choose anyone of these as your own, or all of them.
- Save $2,000 for an emergency fund.
- Invest 50% more money into your investment account than in 2013.
- Increase income you can invest in a 401k or IRA.
- Save enough for that new laptop you want.
- Save enough for a new 55” flatscreen TV.
- Save enough money to live for 3 months without worrying about bills.
- Save enough money to go out on an EPIC bar crawl with your friends.
These are just some ideas, but you get the point. You want your New Year’s Resolution to be something you can start doing right away and accurately measure for success.
2. Pay Off Debt
This can be in the form of credit cards, student loans, car loans, or mortgages, but I’m going to assume that most of you are looking to pay off credit card debt or student loans. This is a good one, and it’s one that I made last year with success.
Getting rid of it was one of the best things I’ve ever done in my life! A huge weight was lifted from my shoulders and I felt rich. It’s liberating and feels awesome everyday knowing I have no debt and a kick ass credit score that’s growing. I brag about it to my friends and family often.
We have a bunch of articles about getting rid of debt (here and here), and we also have a FREE ebook you can download called, “10 Days to Ass-Kicking Your Debt” just by entering your email address at the bottom of this post.
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3. Spend Less Money
This is an arbitrary resolution with no actionable steps or a goal, but we can improve on it.
Every day I actively try NOT to spend money by using an smartphone app called Lift to create a habit of not spending money. When I don’t spend money that day, I get to hit a big ass green button, and it feels good. I suggest you try it by downloading it here.
I also curb my compulsive spending by keeping a 30-day list on my phone. When I see something I really want, I type it on my list. In 30 days, if I still want that item or service, I’ll buy it. If I forget about it or change my mind, then I really didn’t need it and saved myself some money.
There are so many little things you can do to spend less money, but you need to measure your success. I believe spending money is a bad habit that needs to be broken, and your best bet is to develop good spending habits like keeping a 30-day list, bringing your lunch to work (which on average will save you $112,000 in a lifetime), etc.
Just make sure you don’t make yourself miserable. I tried giving up coffee, but ending up hating my life when everyone around me was enjoying that sweet, black, liquid crack. I decided instead to take coffee more seriously and invested in a French Press rather than going to Dunkin Donuts. I saved money and now I’m so pretentious about coffee that I believe Dunkin Donuts is for noobs and addicts, not true connoisseurs like myself. Take that, Folgers!
4. Develop a Long-Term Goal Plan
This resolution includes: saving for retirement, saving for college, and saving for health care. In other words: invest!
This is one of my resolutions this year. I would like to start investing in my future and I will start by opening a Betterment account, because let’s face it, I’m a lazy bastard. If you’re like me, and want the quickest and easiest way to invest, I highly recommend using Betterment, which acts like an online savings account but with WAY better returns. You don’t have to deal with picking stocks and bonds, and you don’t have to worry about trade fees because it’s all done behind the scenes. All you have to do is tell them how risky you want to be, and you can change your mind at any time.
Here’s another way to invest. If your company offers 401k matching, you’re an idiot if you DON’T invest in it — that’s FREE money! I could kick myself for not taking advantage of that when I was working for an employer for the last 20-odd years. The next time you go into work, ask your HR department, or your boss, if you can enroll and put in the max amount. You will see less in your paycheck, but the good news is, the money you invest is taken out of your check before you’re taxed, so it won’t seem like a big hit.
If your self-employed (like me) or your company doesn’t offer a 401k option, you can open up a Roth IRA with Sharebuilder…or do the Betterment thing (like me).
5. Make/Stick to a Budget
Personally, I don’t have a budget, but I will this year! In fact, I plan on using Mint.com to do all my budgeting. I started using Mint.com last year just to automatically track my spending so I can see where all my money goes, and it has changed my financial life. But I am currently not using it to it’s full potential, and that’s something I plan on changing this year.
You can create a budget with a spreadsheet, in fact, I have created a template you can download here.
However, I would still recommend using Mint. You don’t have to manually log in all your transactions because Mint pulls in all the data from your bank accounts, credit cards, and loans automatically. And you can check it on your phone or tablet (like I do every single morning before coffee just to see where I stand financially — it helps me decide if it should be a liberal spending day or a conservative day).
These are the most popular financial New Year’s Resolutions for 2014 according to Fidelity (see the full report here), but I’d like to add a few more to the list that I thought were worth mentioning.
6. Quit Smoking
I would argue that a large percentage of smokers have this on their list every year (I know I did). Did you know the average smoker spends about $2,000 a year on cigarettes? That’s fucking crazy! You could buy a king-size bed with that money, and I should know.
If you’re a smoker, don’t do it for your health, do it for your wallet. That might be more motivating.
7. Change Your Work Situation
Some of you probably hate your jobs for more than one reason. Perhaps you feel you’re being underpaid, or your boss is a total dick. Whatever the reason, you need a change. This could include either finding a new job or getting a promotion/raise.
If you hate your job, let me say that I think finding a new one is the MOST IMPORTANT THING YOU’LL EVER DO IN YOUR LIFE! There is no sense spending 8 (or more) hours a day loathing life. On the surface, it sucks, but it causes deeper issues, including stress, which carries into your personal life. This is the only time I will ever use this acronym: YOLO!
However, if you feel you are being underpaid, or would just like to make more money (so you can save it of course), then all you have to do is ask. I promise you, your boss won’t randomly walk into your office and say, “hey Bob/Sue, I just increased your annual pay by 10%.”
You need to get up the guts and ask for it if you think you deserve it. But don’t just go in blindly and ask, you need to back it up. Do your research and make a list of all the things you’ve accomplished that has helped the company. Get statistics, do your homework, and present an offer even the Godfather couldn’t refuse.
Andrew has written a brilliant post on the lost art of negotiation. Check it out for some helpful advice.
8. Get Healthy
Arguably the most popular New Year’s Resolution of all time. This is on my list every single year, but this year, I decided to make it actionable by saying, “I want to lose 20 pounds in 3 months.”
So what does this have to do with personal finance. Well, last year this resolution was on my list and I achieved it. I lost over 50 pounds by eating only twice a day, drinking less beer, and I didn’t do a single push-up or forced exercise. I developed a habit (using Lift) to weigh myself every single morning, and I set an alarm on my phone that beeps every hour to remind me to drink water.
However, the biggest reason for my weight loss was eating only twice a day and no gluten. I ate breakfast, which was eggs, spinach and sometimes sausage or bacon, and I ate lunch/dinner which was a salad with grilled chicken. I use a sugarless balsamic vingarette I found at Whole Foods that totally rocks. On the weekends, I’m a little more liberal — like drinking beer and shit — but I always manage to get right back on track. Eating less means spending less on food. I essentially cut my grocery bill by 1/3.
I’d be happy to share more details on my daily health habits. Just leave a comment below if you have any questions and I will answer them quickly.
Tools to Help You Stay On Track
The key to sticking to a resolution is to make it actionable and measurable so that you can stay on track and know when you’re successful. I’ve mentioned some of these tools already in the post. Some of them I use, and others I don’t, but I know they will be helpful:
A great and useful web/phone app to help you track your progress while paying down your debts. You can use it to see your debts go down, your credit score increase, and you can even pay all your credit cards through it.
One of my favorite apps that I check on the reg. I have used it to success create a habit of flossing everyday, among others. It has a fairly large community behind it and I’ve even written a few plans for them, which you can subscribe to. Also, we’ll be chatting with the creator of Lift, Tony Stubblebine, in an upcoming podcast episode.
This app keeps you committed to daily tasks. Much like the Lift app, it can help you develop daily habits including not spending money or checking your Mint account in the morning.
Hands down, a must have if you plan on improving your finances this year. This app has changed my life, and I use it every single day. Granted, I don’t use it to it’s full potential, but you should. In fact, we are releasing a book called Mastering Mint this February that will teach you everything you need to know about how to use Mint to budget, save, and grow your money.
Betterment (Free for 30 Days)
The best investing account for beginners or lazy folks like myself. Andrew is a HUGE fan of it, and has invested his own money as an experiment which he has documented here and here. Using Betterment is one of my resolutions this year, and if you want to join Andrew and I, sign up here!
Start Making Your List!
Before making any decisions about your finances for the new year, consider reviewing your current financial profile. Create a master list of all you incomes and debts. Better yet, set up an account with Mint.com so you can see your entire financial portfolio in one glance. This helped me when making my financial New Year’s Resolutions in 2013.
I hope you found this post both helpful and inspiring. I have a feeling this is gonna be a great year for me, and I hope for all of you too.
Share with us your financial New Year’s Resolutions in the comments below. We’d love to hear from you this year!
(original photo by http://adrianstef.ro)