Improving your financial situation is always high on the list of resolutions I hear from my clients. After all, with a mindful eye on your finances, you can build stability for your family and be able to thrive for years to come without worry. (It’s such a hot topic, I created a list of 10 financial resolutions you may want to set for yourself to help in this mission.)
That said, surviving and then thriving takes a little effort in the beginning to get yourself on the right track. Case in point: How many dimes would you have for each person you hear claim that “This is my year”? You may have racked up a few dollars just counting all the times you’ve proclaimed it’ll be your year. And, I mean this gently…. What happened after that proclamation? Exactly. Never fear, these 5 simple steps will help you improve your financial situation once and for all so you can bask in the knowledge that this will be your year for years to come.
The first step in making this year be “your year” to improve your financial situation is just making a decision. Yes, just make a decision. Put your flag in the sand and say, “This is it, I’m going to do it!” I know, it sounds deceptively simple.
Think of it this way: You can’t just go on vacation and go. You won’t have a place to stay or any of your belongings because you haven’t packed. You have to put some effort into looking up hotels and weather conditions and triple-checking that you packed extra masks. And the first thing you have to do is decide where to go in the first place. (After all, “On vacation” isn’t a place! You have to pick a place!)
The reality is that everything you want to do begins with a simple decision. Having a realization and then noticing that you’re curious about it. Then, know that the first step to getting to that goal is to make a decision that you’re going to take action.
So, plant that flag and declare loudly and proudly, “I’m doing it! I will improve my finances this year!”
Then, make every subsequent decision based on that statement. Will it help you improve your financial situation? Great, do it! Will it hurt you or put you further from your goal? Don’t do it. Easy as pie!
You’ve decided that this is your year, and you’re committed to improving your finances! Great! Now, take steps to make that happen. One way to help is by making the intangible tangible.
At the end of the day, the only way you’ll get to your goal once you’ve decided to do something is to take steps to do the thing.
Think about when you were preparing to go to school or to guide your child in picking a major for further education. You asked questions like: What do I/you want to study? What college do I/you want to go to?
From there, based on the information you gathered while you were in that curious mode, you noted the steps you’d have to take such as scheduling a tour, gathering application materials, and so on.
In the sense of knowing that it’s your year for financial improvement and abundance, you have to put numbers to it because numbers make it real. You’re taking that concrete step to move this conceptual idea to reality and that's the power to it.
People always think they have to reduce their expenses to improve their financial situation. That can feel really uncomfortable and potentially really unfun. Asking me to choose between Hulu and Netflix is a Sophie’s choice I don’t want to make.
The reality is that you can only reduce your expenses so much, but there’s no limit to your income.
Whether you’re interested in starting a money-making blog, holding a yard sale, listing your decluttered clothes on Poshmark or in Facebook Marketplace, or anything in between, it’s much more fulfilling to gain more money instead of cutting what you’re spending. As a bonus, you never know what your money-making side hustle could turn into!
Another way to increase your income is by renegotiating your salary or revisiting raises. I have a whole series on this subject area. Learn about negotiating a higher starting salary, asking for a raise when you’re underpaid, and starting a blog for profit. The point is, don’t let the fear of what could happen limit you from your earning potential (which, coincidentally, is another post you may want to read!)
Here is where you can decide, make a step, and then enjoy a bit of cruise control while you work on other, more immediate forms of improving your financial situation this year. Increasing your 401(k) — or 403(b), ROTH IRA, or SEP IRA — contribution is a great way to add long-term financial security. And the sooner you start, the sooner you can take advantage of my favorite c-word: Compound interest!
The more you contribute, and the sooner you contribute, the greater your chances of earning higher returns on your dollars! I don’t want to call it “free” money, so let’s call it being wise with your dollars. Does it mean you’re behind the times if you haven’t yet started contributing to a retirement account? Of course not!
If you’re asking, “What if I don’t have an emergency fund yet? Shouldn’t I fund that before I increase my contributions to my investments?” Yes...and, when you can, add some funds to your investment portfolio to take advantage of that compound interest!
This post on investing for beginners, the section on investment buckets in particular, may help you organize and help you fund your different accounts.
There are so many choices when it comes to how you plan for and track your budget and personal finances. Digital tools, paper planners, keeping everything in your head… Although, please, don't do that last one. What I’m saying is that whatever you can dream of, there’s a tool for budgeting and financial tracking to make it a reality and help you make this your year to improve your financial situation.
At the end of the day, my recommendation as a financial advisor is to have a plan...any kind of plan. The key is to make sure it works for you. After all, if you don’t jive with the system you’re using, you’ll struggle, get defeated, and give up. That is the last thing I want you to do with your finances. If you like spreadsheets, go for that. If you know you like the feeling of pen and paper, do that (and, if you do like pen and paper, may I suggest my personal financial planner developed specifically after hearing what my clients are looking for when it comes to planners and trackers?).
A note on how long to wait to see if a system will work for you: Give it a quarter. That will be long enough to really get into the system to see if it makes sense for you and if it actually helps you achieve short-term goals you’ve set for yourself. If it does, carry on! If not, there are more fish in the financial planning sea. In fact, here are 15 budgeting apps that may pique your interest.
The reality is that everything you want to do begins with a simple decision. Like I mentioned in the first step, put your flag in the sand and say “This is it, I’m going to do this!” After all, “decide” comes from the Latin root meaning “to cut” or “to kill” — you’re cutting away options that won’t get you to your goal of financial improvement.
So, the first step in improving your financial situation is just making a decision that you’re going to improve your financial situation. You don’t have to know all the steps from here to “Good with money” just yet. You just have to make a decision. Because once you make a decision to do something, you take the steps to do the thing. Then, you’ll be on your way to making this year your year that you improve your financial situation.
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