6 Resolutions You Need to Make to Save Money

6 Resolutions You Need to Make to Save Money

Daniel L. Fiorica, Sales Support Manager

As the New Year approaches, you’ll likely be making some type of resolution, perhaps financial. But how do you ensure your resolution is both attainable and part of a long-term goal toward reaching true financial wellbeing?

The truth is, there are some scary statistics about personal finance, like how 40% of Americans1 state they can’t cover an unexpected $400 expense. Or how 29% of American households have less than $1,000 in savings2. But even if you’re not in one of those categories, you should take an active interest in reaching financial wellbeing as a way to further your own personal goals, whether that’s buying a home, retiring with ample income or making sure your kids’ college education is paid for.

If you’re part of the small group whose finances are truly optimized and catered to your unique needs, then your financial resolution could be to proactively monitor for any changes and stay the course. Albeit, preventative maintenance is not a traditional ‘resolution’ but it’s a resolution nonetheless, and everyone should have one. Or more.

Where Are You on the Journey to Save Money? 

Financial resolutions can take many forms and should be specific to you and the many moving parts of your life. In their simplest forms, they are financial milestones that you aim to achieve. From a high level, industry experts tend to have a hierarchal list that goes something like this:

  1. I have at least $1,000 in a liquid savings account, earmarked solely for emergencies (hint: Getting the newly released iPhone isn’t an emergency)
  2. I have a detailed budget in place that actually works for me.
  3. I have 3 months-worth of living expenses saved for emergencies
  4. I have 6 months-worth of living expenses saved for emergencies
  5. I am debt free
  6. I am building long-term wealth

How Do You Stick to the Path Toward Wellbeing?

Once you’ve set up a separate account to hold your $1,000 emergency budget, it’s time to start creating (or fine-tuning) the foundation of every financial resolution: A detailed and realistic budget. How exactly to do this will be a subject for a future Affinity Connect blog. But before you move on to the next stage, here are some best practices to ensure you’re well-hydrated throughout your journey:

  • What’s the best way to eat an elephant? One bite at a time. If your financial resolution is to save or payoff a significant sum of money, make sure you take a moment to periodically recognize your progress. Breakdown your larger year-long goal into quarterly milestones. This will ensure you’re on the right track and staying focused on the end goal.
  • Make a list of actions that would provide an immediate real-world benefit, while also contributing to your financial resolution. For example, if my resolution was to eliminate debt, my action would be “Instead of ordering delivery, I will cook a meal and use the saved money to make an extra loan payment”. Doing so not only contributes to my resolution, but it also gives me a good reason to spend more time in the kitchen, an activity that I value. 

Financial resolutions are usually marathons, not sprints. Because of this, whichever milestone serves as the basis for your next financial resolution, the most important part is making sure you’re motivated enough to stay on track.

For more detailed tips on saving money and building a budget, see Affinity’s Financial Wellness and Education resources.   

                                                  

This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.  

1 Retrieved from https://www.washingtonpost.com/business/2019/02/21/does-america-have-savings-crisis/

2 Retrieved from https://www.magnifymoney.com/blog/news/average-american-savings/