Money, or lack thereof, is a leading cause of stress among Americans today, which is why it is no surprise that the third most popular resolution of the New Year is to spend less and save more. It sounds simple enough, but is actually a very difficult feat. In fact, only 8 percent of Americans who made resolutions are successful in achieving them according to a study done by the University of Scranton.
While it is a good thing to decide to spend less and save more, people often lack the strategy to do so, and therefore fail to succeed. First and foremost, they do not realize that simply proclaiming "I will set aside money every week and stop going shopping" is not a doable strategy, nor is it a realistic one.
Resolutions are tricky, especially those involving finances. Getting started is usually the most difficult part, especially if you have failed at doing it before. However, do not be discouraged if this is the case. Doing small, easy, and achievable tasks are a good way to succeed in your financial resolutions. Remember that it is only the second week of the new year. Resolutions do not expire until next year.
What is your goal?
Spending less or saving more is not a goal. Determine what the reasons are for making the resolution in the first place. Is it to buy a car, or a house, or perhaps take a trip? Whatever the reason is, having this tangible goal will help motivate you to move forward.
Start with the basics. Set up a household budget to clearly track where your money is being spent and how much you can afford to put aside each month. Once you have a doable amount, take advantage of online banking and schedule automatic weekly or monthly transfers from your checking account to your savings account.
Be aware of your spending
Make it a habit to look over monthly statements and receipts to get a clear picture of where and how your money is spent. Decide what you can limit or avoid and go from there.
For example, if you spent $200 dining out last month, commit to spending only half of the amount for next month. Just be aware of how much you are spending, so you can still enjoy going out without going overboard.
Pay more than the minimum.
Pay more towards your credit card monthly. If you have a credit card balance, then you are wracking up interest every month. That is money you could have saved or spent elsewhere. If paying off the total balance is not doable, at least pay more than the minimum amount due each month.
Keep things in perspective
Avoiding shopping altogether is a nearly impossible task. Instead, before deciding to purchase anything, ask yourself, "How many hours do I have to work to be able to afford this?"
For example, if you want to purchase a $100 purse and you earn approximately $15 an hour, you would need to work over 6 hours to be able to buy it. Will purchasing it be worth it?