December 26th 2023.
'Tis the season to set New Year's resolutions! Unfortunately, as much as we'd like to achieve them, the truth is that over 90% of people fail to do so.
Despite this daunting statistic, many of us still love the tradition of making resolutions. As you start to plan and dream up your vision boards, here are four financial New Year's resolutions to avoid making, as well as some tips on how to create goals that are more achievable.
First, you should avoid the resolution of becoming debt-free. Although it sounds like a great goal to achieve in life, it usually takes much longer than a year to do so. The average student loan debt per person is over $28,000, and that doesn't include mortgages or medical bills. Instead of a vague debt-free resolution, you can identify specific debt or an amount to tackle and focus on paying off or down for the New Year. Achieving each goal will give you the encouragement you need to continue on your journey to debt freedom.
Second, you should avoid the resolution of cold turkey spending cuts. Going "cold turkey" often leaves people feeling deprived and defeated if they fail, and many splurge and overspend as a result. Instead, reduce excessive spending from every day down to a few days. Once you get used to cutting back in this manner, you can add a day or two more. You might even find that you don't need the things you were spending on as much as you thought. You can also turn excessive spending into behaviors that improve your financial situation. For example, you could meal prep your breakfast, dinner, or lunch for two to three days a week, or buy your favorite snacks and drinks in bulk and keep them at your desk. Every time you take a snack or drink from your stash, you can add the money you would have spent to a savings jar.
Third, you should avoid setting insurmountable savings goals. Having hundreds of thousands of dollars saved is great, but it's not realistic to expect to save that much in one year when your salary is $60,000 or less. Instead, set a SMART goal that requires discipline and a positive change in behaviors. Start with a savings goal of at least $500 to $1,000 or one month's salary, and when you reach that goal, set a new one that requires even more effort.
Finally, you should avoid the resolution of quitting your job to start a business. Not liking your job isn't a good enough reason to quit, and you should keep your job during your entrepreneurial learning curve. Your salary will help you pay the bills, sustain your lifestyle, and fund any necessary business startup and formation expenses. Instead of quitting your job, start a side hustle. Become a "dualpreneur" and use your job's benefits and steady income flow to develop your side gig into a profitable business.
By avoiding these resolutions and setting achievable ones, you'll be sure to have a much healthier financial future. Good luck!
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