Money is on Americans’ minds as they make new year’s resolutions.
GOBankingRates.com found that money is what Americans think about most. Chief among their resolutions is the goal of saving more and spending less. And guess what tops all financial resolutions? Creating a budget and sticking to it.
Budgeting comes in above all other financial resolutions for a good reason: It’s the surest way to achieve any other financial goal. Look at what else GOBankingRates.com discovered about this year’s top resolutions, and you’ll see a blueprint of financial ambitions right in line with Baby Boomers’ hopes, dreams and concerns:
- Build an emergency fund
- Improve my credit score
- Increase my income
- Pay down debt
- Save more for retirement
- Have more spending freedom
- Make a large purchase (home, car, etc.)
Although most Americans have an abyssal record of achieving new year’s resolutions – University of Scranton research suggests that only 8 percent of people achieve their new year's goals – you can be among the single digits who persevere to achieve financial goals. It all starts with budgeting.
Of course, budgeting isn’t the most exciting financial topic, just ask any ardent budget avoider. But the genius of budgeting lies in creating smart financial habits that enable you to reach your goals.
“So what’s the key to succeeding? Having a well-crafted goal,” says personal finance writer Laura Shin.
In a column for Forbes, Shin shared some insight from psychologist Dr. Will Meek about setting goals: “If we shape a goal well, it’s something we’ll continue to pay attention to and that will help us stay motivated. If we don’t shape it well, we’ll lose track of it and lose our motivation, and it won’t come to be.”
Here are five ways to start budgeting – and stay motivated throughout 2017:
- Focus on what you want. Meek explains that it’s easy to become overly ambitious in setting financial goals – budgeting included. It’s equally easy to lose heart if you set lofty goals that can’t be attained. He recommends being positive. Instead of insisting, “We’re going to spend less money on frivolous things,” say, “We’re going to spend money only on things we truly value.”
- Be a smarty pants. Use the SMART method, a time-tested secret to accomplishing goals, in developing your budget, recommends The Simple Dollar. The acronym stands for specific, measurable (with measurement), achievable, relevant and time-oriented.
- Track your expenses. You can’t create a realistic budget until you get a handle on spending. Some experts recommend tracking your expenses – down to the penny – for one month. You can do it the old-fashion way by collecting receipts or go high tech and use automated software.
- Monitor your progress. This is where the habit-forming part of budgeting comes in. After setting SMART goals, identifying spending patterns and tracking expenses, it’s time to build your budget and monitor it regularly. “Once you have it written down, don’t ignore your budget. Make a point to compare your actual expenses with your budget on a regular basis, such as each payday,” suggests Maryalene Laponsie, writing for MoneyTalk News.
- Be ready to flex. A budget is never set in stone. Think of it as a living document that may need to be revised depending on your spending and other factors, such as changes in employment or reduction in debt.
“Ultimately, your budget is not about restricting your money; it’s about empowering it,” Laponsie advises. “A good budget finally puts you in control of your dollars and allows you to dictate where your money is going rather than letting your bank account get nickel and dimed by what may amount to silly, incidental purchases.”
To learn more about budgeting, head over to other ECCU resources, including, “Three Easy Ways to Take Back Your Budget Today,” “What the Bible Says about Budgeting” and “Avoiding Financial Heartbreak by Budgeting for Romance.”