It does not necessarily need to be the end of the year in order to make resolutions aimed at making one’s life better in a variety of ways. Now that we are halfway through 2016, it is a great time to start figuring out new ways to manage your money in order to get the most out of your investments and maximize your long-term capital. As the economy is constantly changing, so to must your investment strategy. With that in mind, maybe it is time that you consider making some half-year resolutions.
According to Fidelity Investments' seventh annual New Year Financial Resolutions Study, 37 percent of Americans were expected to make financial resolutions this year, as compared to 31 percent at the start of 2015. The top three resolutions reported in the study are: increased saving at 54%; decreased spending at 19%; and paying off debt at 16%. Of the surveyed subjects that placed saving as their top priority, 63% preferred to allocate funds for long-term goals such as college, retirement and health care. On a rather positive note, 72% of those surveyed believed that they would be better off financially in 2016. Resolutions are nice and the optimism of them can provide motivation and make you feel good inside, but sticking to them is an entirely different story. We have all ended up on the losing end of promises we make to ourselves in the new year or at any time of the year for that matter. This is quite evident in the case of diet and exercise, often leading to a week at the gym before one slowly goes back to their old ways. But it is also true with financial resolutions. A lot of times this is due to poor planning. Another part of the Fidelity study, stated that only 10% of those making financial resolutions have a plan in place to make and stick to a budget. Setting a budget is probably the single most important aspect to achieving your financial resolution objectives.
The first step in this process should be to establish a clear and precise goal. Your goal can be as simple as setting aside enough money to go on a family vacation or as complex as saving up to buy a new house. No matter what your aim might be, having a solid goal will significantly improve your chances of adhering to a budget. Once you have established your main goal as setting a budget, it is imperative that you accurately assess all of your daily and monthly expenses. This will assist you in identifying easily looked over costs, such as your daily bagel, coffee and newspaper at the deli. Keeping track of everything will help with preparing a practical budget, as it will give you an accurate picture as to exactly how much you spend on a regular basis.
Keep a notebook or make yourself a spreadsheet, depending on your preference, where you enter each thing that you spend money on as it will allow you to see what you are spending and decide if there are things that you no longer need. Regardless of how you decide to record your expenses, the main thing is that it is readily available to you in order to make changes as needed. When you have figured out how much you have left over at the end of any given month, be sure to account for all of it, deciding how much will go into savings and how much is expendable. Just because you have set your goal and figured out your expenses, as well as how to record them, does not mean that your job is done. It is crucial that you regularly measure the difference between your actual expenses and your budget, preferably on a weekly basis. This will enable you to catch inaccuracies where you did not budget enough and others where you allotted more than you have spent, possibly allowing for a de-stressing night out on the town. Establishing and maintaining a budget throughout the year can be an overwhelming experience. However, there is help out there to be had that can alleviate some of your burden.
Nonprofit organizations such as the Financial Counseling Association of America and the National Foundation for Credit Counseling can provide you with free assistance on how to stick with it. There are also numerous budgeting coaches you can hire for a fee to help you on your path. It can be much easier to create a sensible spending plan for your capital when you have a professional to guide you each step of the way in the budgeting process. One of the most important things in successfully maintaining your budget is to be amenable to making changes when necessary.
It is essential to regard your budget as a living, breathing thing that must be tended to on a regular basis. This is how you can tell where you are overspending and where you can cut back, allowing you to accurately make adjustments when necessary. A budget is not meant to restrict you, but rather to place you in a position to have full control over your money.
Making resolutions alone can have a positive impact on your psyche, but actually achieving what you resolve to do can have a huge impact on your financial position. According to the study performed by Fidelity Investments, of the people who came close to achieving their financial resolutions from 2015, 56% said they improved their financial situation this year, compared to 34% of those who did not come as close to accomplishing their resolution.
Regardless of how you feel about your financial situation, there is always room for improvement. Developing and properly managing a budget can only help to enhance your overall financial worth. It can never be too early or too late to construct and coordinate a reliable plan for the financial security of you and your loved ones. Along with a new outlook, you can create a new you, one with the financial stability to overcome obstacles and climb your way towards the pinnacle of long-term financial success.