I don’t like New Year’s resolutions very much. The whole thing feels overwhelming, especially after just surviving the holidays. Also, it seems like a difficult time of year to make big, wholesale changes! For instance, deciding to start exercising when it’s ten below out, kids have before- and after-school activities, and if you aren’t recovering from the flu or a cold, you are just about to get it. It seems like June would be a better time to make exercise resolutions, right as the weather gets better, school lets out and (hopefully for you) vacation is on the horizon. That being said, January 1st is a good time to make financial planning resolutions. The tax year is just beginning, raises and bonuses are handed out, and you’ve likely just spent time reviewing your benefit elections at work.
All the standard financial resolutions are out there; save more, pay off debt, maintain budget, go out to lunch less (which might be both a financial and health resolution). Those are all good resolutions on which I love to see clients make progress, but most of us know how hard it is to accomplish any resolution. Some studies have indicated it takes, on average, more than two months to form a new habit.*
It’s very difficult to make a change to daily routines, mostly because we are all so busy. And, if you are like me, you may be unfamiliar with routine all together. The good news is you can leverage technology to help you make significant progress in your financial life in 2017!
If you are in residency, or starting your first full-time position, and trying to figure out how to manage or begin eliminating debt, start by setting and maintaining a budget using software that has an app for your phone. This will make it easy to enter and monitor expenses on the fly. Once you know how much extra you can afford to devote to your loans each month, utilize bill pay at your bank and set up your monthly payment to include the extra.
Maybe you just paid off your loans and you’re trying to decide what to do with your extra cash-flow, or you might be well into your career and have found cash may pile up, but is ultimately spent instead of saved for retirement. One way to ensure extra cash-flow goes to work for you is to have it automatically transferred each month. Many payroll departments allow you to have portions of your paycheck sent to two separate places; once you decide on a savings goal, consider having unneeded cash-flow sent directly to an investment account. You’ll learn to live without it and it takes one conversation with your payroll department or bank versus a conscious monthly effort to track cash-flow and move money. There’s a side benefit in that you also become a systematic investor and don’t fall prey to trying to time the markets with large chunks of cash.
The nice thing about financial planning resolutions in this day and age is once you make them, you can use technology to automate the process giving you a higher probability of success by eliminating the daily conscious effort to create a new habit.
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