If you’ve got bold plans for improving your personal finances in 2016, New Year’s resolutions can provide the inspiration you need. Unfortunately, change is easy to begin but hard to stick to — a fact that’s underlined by research stating that only about 40 percent of New Year’s resolutions are successful. Here are three painless money resolutions for 2016 that you’ll actually be able to adhere to in the long term.
1. Set Financial Goals
Planning is an essential element of financial health which costs nothing, and yet many people still don’t do it. All you need is some quiet time when you can focus and make a list of financial outcomes you want in your life. These might include things like “pay off my auto loan,” “start an emergency fund” or “save for a down payment.” Once you have your goals identified and written down, you’ll find yourself naturally filtering your spending decisions in the direction of those goals. It’s easier to say “No” to a pricey restaurant dinner if you think about your goal of paying off your auto loan. For example, you can cook the meal at home and add the extra money to this month’s loan payment.
2. Pay Yourself Automatically
One way of valuing yourself and your future is to put your own savings account front and center every pay day. Set up automatic deductions from each paycheck to go into a savings account. It’s a painless way to inject some fiscal discipline into your budgeting because you only have to make the decision once. After that, you won’t even see the money in your checking account, and you can simply budget around your remaining available funds. Even better, have the paycheck deductions funneled into a CD or other account that isn’t easily accessible.
3. Divide Bonus Money into Thirds
If an unexpected windfall drops money in your bank account, it’s easy to ignore your ordinary budget and simply spend it all. After all, your bonus isn’t needed to pay your monthly bills. A valuable strategy for windfalls of any size is to divide them into thirds:
- One third for the past to pay down debts from your earlier large purchases
- One third for the future to put into a savings or retirement account
- One third for the present to spend now and have fun
Wise money management is made up of many small steps, and some of the most important ones are actually quite easy to implement. Start the new year out with these three painless resolutions, and improve your money management habits over the coming seasons.