We all create them with the best of intentions, swearing up and down that this year we will stick to the financial resolutions we set for ourselves. But come February – or even mid-January – we’ve already blown our budget and written off the daunting task of getting our financial ducks in a row.
It’s not resolutions in general that fail, however, it’s the type and scope of the resolution that will likely decide the level of success that we reach. According to an article by Forbes Magazine, the main reasons why financial goals fail can be chalked up mainly to not having a plan and – drum roll, please – setting unrealistic or undefined goals.
What are those unrealistic or undefined goals? Let’s check out a few of the most common. (And if these made it on your list of resolutions this year, you may want to reconsider.)
#1 – To stop eating out completely.
According to a recent Gallup Poll, Americans spend $151 per week on average eating out. Yes, that’s quite high (although lower than decades past once inflation is taken into consideration). And yes, that needs to be addressed.
But let’s be honest – are you able to eat every meal at home and still maintain your sanity?
Instead of cutting this expense entirely, consider being smarter about your purchases when you do eat out – i.e. don’t order drinks, desserts or appetizers; share an entrée; find discount deals; etc.
#2 – To never indulge in another coffee shop beverage again. Ever.
New studies released in 2012 estimate that the average American spends $1,100 annually on purchasing coffee drinks outside the home.
But when it comes to budgeting, deciding where to cut back is not a one-size-fits-all kind of answer. If you’d rather save your coffee habit and cut your cable, then go for it. Or, if you’d rather just scale it back – ordering a plain coffee instead of a latte, or opting for a smaller size – that can do wonders for your budget as well.
Don’t deprive yourself just for the sake of feeling disciplined –your dedication to that feeling will soon fade.
#3 – To cut all vehicle costs and find an alternative -- i.e. bike to work.
Again, where’s the wiggle room in parking your car and never touching it again?
Unless you live in a climate that promises to never snow, rain, or dip below freezing, this just isn’t feasible. Then there’s the small factor of if you are running late – are you going to tell your boss that you simply couldn’t peddle fast enough?
Consider your time management, distance to work, and dedication to exercise. If this means you scale it down to biking once or twice per week, that is a much more manageable goal.
#4 – To save more. Lots more.
If you don’t know where your spending habits currently stand, it can be next to impossible to really track if or how much you are saving every month. And, let’s face it, if you aren’t tracking and seeing noticeable progress, the chance of you sticking to the very broad goal of “saving more,” are slim to none.
You can save more, you just need to be realistic about how much and where it’s going to come from. Make a plan (a reasonable one), set a goal, and find a way to start organizing your spending habits.
#5 – To get out of debt, completely and totally.
Again, talk about broad.
First of all, are you creating new debt every month or are you already spending less than what you make? How much debt do you actually have? Given your expenses and the amount you owe, is it feasible to get completely out of debt in a year?
No one should want to be in debt, but if you aren’t specific and armed with a plan, you’re simply increasing your chances of spending another year paying the minimum balance and racking up interest costs.
What are your specific and reasonable financial New Year’s resolutions? Share them – or the resolutions that didn’t work – by leaving a comment.