The New Year is the perfect time to reflect on your life and how you can make positive financial changes. In fact, according to a survey by Statistic Brain, making financial decisions is the third most popular resolution people make.
Yet, considering how difficult it is to stick to New Year’s resolutions, it’s important to commit to those that will make a meaningful impact. Here are 5 ideas to consider.
1. Stop comparing yourself with others
It can be hard to see your friends drive nicer cars and own bigger houses than you. As a result, you might be thinking that they make more money than you and you need to keep up.
But in reality, it’s quite possible that your friends are broke, stretched so thin by debt that they’re barely treading water. In other words, appearances aren’t always evidence of stability and happiness.
If you’re going to compare yourself to anyone, look in the mirror. Think about what you accomplished financially over the past year and set goals to make better progress in the new year.
2. Start automating your savings
Roughly a third of Americans don’t have any short-term savings, according to the 2017 Consumer Financial Literacy Survey by the National Foundation for Credit Counseling.
Even if you are saving, setting more money aside for your financial goals can help you reach them more quickly. For starters, you can try automating your savings.
There are two ways to do this. First, sign up for Chime Bank’s Automatic Savings program. Simply use your Chime Visa® debit card for everyday purchases, and Chime will round up the transaction to the nearest dollar and transfer the difference to your savings account. The program also allows you to automatically set aside 10% of each paycheck in savings as soon as you get paid.
The second way is to set up automatic transfers at the beginning of every month from checking to savings. Doing this at the beginning of each month makes that amount money unavailable to spend. This means you’ll need to learn how to live on the rest – while watching your savings account grow.
3. Add another percent to your retirement contributions
Long-term savings is just as important as short-term savings. If you have an employer retirement plan — for example, a 401(k), 403(b) or 457 plan — your contributions are typically based on a percentage of your income.
For example, if you earn $60,000 a year and contribute 5%, your monthly contribution is $300. But, if you up your contribution to 6% this year, this amount goes up to $360. That’s not a big increase, but it can make a huge difference down the road as your retirement account balance compounds with interest.
4. Reinvent your gift-giving
A 2014 survey by Eventbrite found that 72% of Millennials prefer spending money on experiences than material things. As a result, aligning your gift-giving in the new year to focus more on experiential giving can help improve your relationships.
In many cases, this won’t even require that you spend more money on gifts. And, if you’re going to spend the money anyway, you might as well make it more meaningful. For example, instead of buying my dad gifts for Father’s Day and his birthday this year, my brothers and I decided to take him pheasant hunting. That time together with his boys meant more to my dad than any item we could have bought him.
5. Spend more on food
Spending more money isn’t your typical New Year’s resolution, but in this case, spending more in the short-term can help you save in the long-run.
Healthy food typically costs more, but all the fat, sugar and additives in processed foods can cause health problems down the road. Because spending more on fruits, vegetables and other whole foods can help you prevent major health issues in the future, consider it as an investment with favorable returns.
The bottom line
As you’re planning your money resolutions for the new year, it’s essential that you choose ones that are realistic and you’re excited about. Otherwise, they’ll likely fall by the wayside within a month or two.
Since every person’s financial situation is different, it’s possible that not all of these resolutions are a good fit. Know yourself and your needs, and avoid pushing yourself too hard. As you plan your money resolutions carefully, you’ll be more likely to keep them and establish healthy financial habits for life.