One of the most common New Year’s resolutions is to save money

May 2, 2019 Critical Thinking

One of the most common New Year’s resolutions is to save money, along with eating healthier and getting more exercise. We usually set our goals at the beginning of the year which, to be quite honest, we often forget about as the days pass. Did you know that just by the second week of February, about 80% have already broken their New Year’s resolutions, and only 8% of people achieve theirs?
Regardless of the time of the year when you set your goals, you can only achieve them when you commit to them and when you have actual action plans to back them up. When it comes to money goals, it is important to stick to a realistic, workable plan.
There is no deadline on what age you should already have your finances in order. However, it is also never too early to start building your future. If you have not given your finances a thought and are hesitant or uncertain how to get started, perhaps you can start with simple goals.
1. Get Rid of Expensive Addictions
When luxurious spending becomes an addiction, it becomes an obstacle that keeps you from saving more money. Spending less on things that cannot become productive investments and have no financial benefit will not only make you financially in control, but it also allows you to set your priorities straight. Buying less of the stuff that you don’t need frees up space in your home and gives you more time to focus on protecting and maintaining more important assets.

2. Spend Less than You Earn
This goal goes without saying, but is important to emphasize, nevertheless. Living on less than what you earn allows you to put the rest of your income to your savings and to pay off your debt. A survey on financial wellbeing showed that 52% of employees are stressed about their finances and 45% said that financial problems are causing them the most stress. Setting realistic action plans to be able to minimize your expenses can contribute to stress reduction.

3. Earn More
It’s always good to have an extra source of income. It can be a side business, a part-time gig, or an investment, among others. Having more than one income stream can also help with the goal of being able to spend less than your total earnings and can also be a form of income insurance.

4. Have Emergency and Freedom Funds
Crises and other unexpected expenses are inevitable. We never know when they may occur, but it’s important to be prepared. Especially when you are living on your own and need to be financially independent, having emergency and freedom funds to support your lifestyle and anticipate for unusual expenditures can give you a peace of mind.

5. Be More Informed
According to a study, 69% of millennials (Generation Y, born between late 1980 and 1994) are highly confident of their financial knowledge. However, only 24% demonstrated basic financial literacy. You can jump-start your personal finance journey by arming yourself with the right knowledge and understanding of money management and personal finance matters. There are many helpful sources on the internet. You can also be inspired by success stories and even digital comics that dwell on personal finance topics.

6. Set Specific Purposes
The previously mentioned goals are the things you can consider as stepping stones to building your future and to have reassurance for different situations. But do you have anything in particular in mind that you are saving money for? Once you’re confident enough about managing your personal finances effectively, you can consider if you’re ready to commit to long-term goals. Identify specific purposes that will help you become more motivated in saving or investing your money. These purposes could be saving for retirement, living debt-free, or buying your own car or house, to name a few.
These are just some of the simple money goals to help you start developing good money habits that can set you up for a better future. You don’t have to do all them at the same time. You can start with one or two, and as you go along consistently, the rest will naturally fall into place.