New year, same old failed resolutions? Find out how to save money this year in a sustainable way!
A new year is upon us and while it may feel great to have a long list of ambitious pursuits ahead of you, the fact is, most of us fail to stick to our New Year’s resolutions. Typically this is because we try to take on too much at once, or fail to properly structure the goals we do have to make them more manageable.
If you’re interested in improving your financial future (and if you’re reading this, I assume you are), then here are three simple resolutions you can easily make and keep this year.
Save The SMART Way
Somewhere near the top of most people’s list will be a vague reference to saving more money. Let’s be honest, it was probably in the resolution list last year… and the year before that.
But a resolution like “save more money” will never work out because it’s not a SMART goal.
SMART is a goal setting technique that has been proven to help structure and eventually achieve your goals. It stands for:
Specific – What exactly am I trying to achieve?
Measurable – Can I measure my progress?
Attainable – Is this target realistic?
Relevant – Is this goal important to me and why?
Timely – Is there a deadline to focus me?
As you can see, a resolution like “save more money” doesn’t fall into any of these categories. In fact, it’s so vague that it makes it easy for us to ignore it whenever it suits.
However, a goal like “save 10% of my income every month for one year” meets these criteria.
Make it easy for yourself. The next ten minutes you have free, call up your bank and set up an automatic transfer so that 10% of your paycheck every month goes into a savings account.
That money is still there if you desperately need it, but you’ll be surprised at how fast you begin to change your spending habits and start thinking more responsibly about your finances when you’ve less disposable income to spend.
Once you’ve built up a small cash cushion, you can start investing that money where you best see fit.
Invest in Knowledge
As Benjamin Franklin said, “An investment in knowledge always pays the best interest”.
There’s a wealth of information out there, and more ways to educate yourself on the world of finance than ever before. If you’re serious about getting your finances in check, you should invest a little time this year in enhancing your knowledge.
Remember to think SMART about this and make specific targets like:
“I am going to listen to one financial podcast a week.”
I’d thoroughly recommend Motley Fool Money, which is released every Friday and gives an entertaining roundup of the week’s business news – along with interviews with some of the greatest minds in investing and personal finance. NPR also has a great podcast called Planet Money, which gives a broader view into the way money influences our lives.
Both are available for free on iTunes or other Podcast apps.
“I am going to read three investing books this year.”
There are hundreds of great books out there that specifically deal with the world of investing. I’d recommend you start with One Up On Wall Street by Peter Lynch. You could also broaden that resolution to include books about your favorite business leaders or recent economic events – anything with a focus on the world of business and finance will help you become a better investor and a more well-rounded person.
Also, if you’re brand new to the world of investing, we’ve got a free ebook – ‘The One hour Investor’ – that will get you up-to-speed with the stock market in an hour. That’s one hour to complete one-third of a New Year’s resolution… not bad.
Get Some Skin in The Game
It’s all well and good to save money and broaden your knowledge, but nothing will make you a better investor than getting involved.
If you’ve never invested before, make this the year that you do so. You don’t need a big cash pile – for less than $20 you could buy one share (or a fractional share) in a company you admire. That will never make you rich, but just getting off the mark is a huge step.
So here’s the best New Year’s resolution you can have:
“I will invest in at least one company this year.”
And if you’re already an investor, you should try to diversify your portfolio this year with at least six companies.
Once you’ve invested in a company, you’ll instantly discover a new interest in how that company is run, how it’s performing, and where they’re headed in the future.
You’ll learn more about investing from that $20 than you will from all the investing books, blogs, and podcasts put together.
Investing is a lifelong pursuit. You’re not supposed to be good at it right away. No matter how much you start with, start now. Learn from the mistakes you make and keep challenging yourself to do better.
A year from now, you’ll be glad you did