Is this the year where you'll not only set financial New Year's resolutions, but you'll actually meet them? Let me show you financial resolution examples, plus give you motivation for how to meet them.
Setting financial New Year's resolutions can be both exciting + scary.
What if you don't meet them? What if you don't even get close?
I want to show you what financial resolutions are, lots of examples to inspire you to set achievable ones, and then some motivations/consequences you can set up to make it more likely you'll meet them.
What are Financial New Year's Resolutions?
Financial New Year's resolutions are any goal you resolve to accomplish that has a money component to it.
I'm going to give you some examples below, but I want you to broaden your scope beyond just paying down debt and saving more money (even though, yes, these are great resolutions!).
Let me show you what I mean.
Note: For any financial resolution you choose, you'll want to track your progress. It really helps keep motivation up, and/or point out what you need to change to get back on track. I personally use the free app Personal Capital, which will automatically track everything for you once you set it up.
New Year Financial Resolutions Examples
Here are some examples of financial resolutions:
- Save $5,000
- Max out our Retirement account contributions — 401(k), IRAs, etc.
- Pay off two of our creditors, completely
- Get completely debt free
- Save for half of a down payment on our dream home
- Come up with a college savings plan for our child
- Open up a savings account
- Start funneling 10% of my income via automatic withdrawals to our savings account
- Spend $150 less on groceries, every month
- Get our accounts organized and shut down the ones that no longer make sense
- Start saving for retirement
- Save enough percentage to my 401(k) to get the full employer match
- Start a savings account for our infant/toddler/child/teen
- Score an internship in the career field I want to eventually get into
- Save enough money to pay cash for next summer's family vacation
- Go on a family vacation next year
- Save 50% of our income, or one of our paychecks (in a two-paycheck household)
- Refinance our mortgage to pay it off in 15 years instead of what we have left of our 30-year mortgage
I could go on, and on, but you get the point!
New Year's Resolution – Financial Goals
With the New Year comes a collective motivation to take advantage of our semi-clean slates and become more of the people we wish to be.
Many attempt New Year’s Resolutions, and from all of the articles about them on the web, I think that by February, few survive.
This year, I’d like to take the time to outline a financial carrot and stick incentive for some of the more popular resolutions to hopefully motivate you to move in the direction of your goals.
Financial Resolution #1: Lose Weight
- The Carrot: You can actually earn money by losing (a lot of) weight! Healthywage.com offers a free challenge that pays you $100 to bring your body mass index from above 30 (considered obese) to a healthy level (below 25) within one year. Check out the details on their website, as well as an added incentive: if you bet $300 of your own money, the prize comes to $1,000! Prize money comes from corporate sponsors, and your weight must be verified by a third party.
- The Stick: In 2012, a staggering 40% of large and mid-sized companies began penalizing workers who were obese and/or who smoked with higher health care premium and deductible costs than their colleagues. This trend is growing quickly, and it could just be a matter of time before it hits your own insurance premiums (or has it already? Our agency began charging higher premiums to smokers this past year).
Financial Resolution #2: Pay Off Debt
- The Carrot: You can deal with your creditors directly and attempt to negotiate smaller debt loads, which is like free money to you (check into the tax consequences of doing so). Another carrot is to join the debt movement being launched today in the personal financial blogosphere with a goal of inspiring, helping, and motivating people to pay down $10 million worth of debt over the next 90 days. Submit an application and you could be awarded one of several scholarships towards paying down your debt even faster.
- The Stick: We were paying approximately $75 per month in interest payments to carry our debt back in 2009 when we decided to get ‘gazelle intense’. If we had decided to pay off the debt in the amount of time the creditors wanted, we would still be paying on most of it today. Since paying it off in September 2010, we have saved $2,025 of our money from going into the creditors’ pockets in interest payments. Calculate how much interest you are paying per month and multiply this out several years from now. Do you want to pay this to a company, or to yourself?
Financial Resolution #3: Quit Smoking
- The Carrot: Let’s say you consume 3 packs of cigarettes per week. At an average cost of $5.98 per pack, you are looking to save roughly $932.88 per year by quitting your habit.
- The Stick: It should come as no surprise to you that even though the tax rate on cigarettes has been increased more than 100 times across the US since 2002, states are moving to raise it even higher in order to cover budget shortfalls. The average state tax rate on a pack of cigarettes is $1.49, with an additional $1.01 in federal excise taxes. That means you are paying approximately $390.00 in extra taxes each year (based on consuming 3 packs per week).
Financial Resolution #4: Start a Savings Fund to Purchase a Home
- The Carrot: Depending upon your income, you may qualify for a matching savings account called an Individual Development Account (IDA) to help you reach your goal (maximum matching is typically $2,000, and the rate depends on the program). “IDA account holders must save a minimum amount on a fairly regular basis, within a certain time frame, and ultimately use their savings for specific asset-building purposes, such as the purchase of a home…”
- The Stick: Certainly not everyone needs, wants, or should purchase a home. Renting is a perfectly fine option. If you do want a home, you will get nowhere if you don’t start to save for the down payment as soon as you can. On top of that you will need closing costs, maintenance costs, moving costs, etc. Wait too long to get started and these historically low interest rates we’ve had over the last few years may be out of reach for you.
Financial Resolution #5: Start an Emergency Fund
- The Carrot: Get a jump-start on your emergency fund savings signing up for the Digit.co savings app. They use an algorithm to figure out your typical spending each month, then they automatically withdrawal small amounts of money toy our savings — small enough that you don't really notice. Within 2 months, we had $597 sitting in a savings account for us! It's pretty awesome.
- The Stick: There is a saying that most Americans are 1-2 paychecks away from declaring bankruptcy. And it’s not just a saying; a recent survey conducted on behalf of a financial consortium shows that one in three Americans would be unable to make their mortgage or rent payment beyond one month if they lost their job. Have you calculated how long your savings will last you in the event of losing your household’s income?
Financial Resolution #6: Start a Retirement Account
- The Carrot: In this article I have outlined how to potentially get double tax incentives for low to middle income households who contribute to retirement accounts through the Saver’s Tax Credit this coming year.
- The Stick: Have you looked at your social security statement in the last few years? How much can you expect from social security per month if you did not save any money for your retirement (and if the fund stays liquid enough to pay you when it’s your turn)? If you don’t feel like getting the statement out, I can tell you that the maximum possible benefit for a worker retiring at age 66 in 2011 is $2,366; the average, which is where most of us will be, is around $1180. It’s not likely to pay your monthly bills in retirement, let alone the additional medical costs and (hopefully) entertainment/travel things you’d like to do with your time. If you haven’t already, start saving today!
How to Own Your New Year's Resolutions
When I was in my early twenties I went to an acupuncturist who quickly caught onto my limited vocabulary of should, could, or would. Almost every sentence I used then had one of these words in it — a thought accompanied by a heaping side of guilt. It was so bad that my homework after one session was to eliminate those words from my vocabulary all together. I looked at her incredulously that day, asking, “then what would I say?” Literally, I could not think of another way to say what it is that I wanted to if I could not preface it with one of those words (love those conditionals!). She was not surprised by my question at all. She suggested, “how about say I can, I feel, I want to, I am, I do, I don’t, I won’t.” All of these statements seemed so harsh and permanent to me, especially coming from the much more comfortable land of the conditional.
Over the years since, I have found that saying those conditional words was a great way to pass judgment and beat myself up. It was for any number of reasons: I should have called that person back more quickly, I would like to become a writer, I could have done something differently, and I should have asked my professor that question. By saying those words, it meant that something else must happen in order for me to say, do, feel, or be what I wanted. For the deeper meaning, it means that I was feeling powerless in achieving or getting what I wanted. And since I felt powerless, I did not have to own the results — after all, if I achieved a great result then it was a semi-fluke, and if I didn’t achieve anything then it was because I hadn’t committed to it anyway.
If we take those same phrases of my early twenties and put some backbone to them, they read like this: I will call that person back more quickly, I want to become a writer, I can do something differently, and I shall ask my professor that question. Perhaps this territory of definites and the potential for mistake-ridden circumstances is as scary for you as it was for me when I to change my words. After all, a conditional statement is a lot softer and allows the leeway to back out of something and not really own its outcome because it is conditional upon something beyond you to make it happen. But a conditional statement also dilutes life.
What I urge you to do this year while writing your New Year’s Resolutions is to include at least one resolution from your land of conditional. If you have this inkling that you should open up a retirement account, if you wish that you would find the time to check your credit scores, if you wish that you could find a way to save money even though you are living paycheck to paycheck, then make it happen this year by putting yourself in the driver seat. Change any of the above statements or the ones from inside your own head into statements with a backbone. Dismiss any judgment of the outcome and own your resolution. If nothing else, this will be the year when you move one from the “I should” category to the “I tried” category.
Since I lived in the land of conditional for most of my young adult life, I’ll get you started with one of my own.
I know I should exercise, but somehow it is just easier to sit on a couch and work on a laptop instead of getting up to go for a bike ride/walk/swim/fill in the blank. And it’s not just the lack of exercise; with work being extremely busy and Frugal Confessions keeping me quite busy, I have been eating lots of pastries, chocolates, and chips instead of healthier options. It’s a good thing I’m not famous, because if I were the Houston Paparazzi would be all over my newly acquired writer’s muffin top! So for 2019, I will exercise at minimum twice a week, every week.
What is your 2019 New Year Resolution from your land of conditional?
Have You Made Your Financial Resolutions for 2019?
If not, let me help you with two last resources.
The first? Is a list of 30+ 30 day challenges (free). You're bound to find something inspirational in there.
Secondly, let me share with you my own past financial New Year's Resolution.
Several years ago, I had a feeling of scarcity. It's a feeling I was ashamed of, because my then-fiancé (now husband) and I are so blessed. We make good money, we recently bought the home of our dreams, we have two vehicles, enough money to fund retirement and entertain ourselves…but it has not felt like enough.
In our defense, at the time, our bills had increased substantially; we were working to pay off his car entirely, pay for our wedding and honeymoon in cash, and just purchased the home of our dreams. So, funds that we were used to seeing on bank statements for the last several years had been depleted.
Instead of celebrating our life of abundance, I let this feeling leave me insecure, and wanting to hoard money and earnings just like a squirrel who competitively buries all the nuts he can find for fear of the winter famine to come.
But in reality, this led me to feel even more insecure and even less abundant.
And so it was with an empathetic and open heart that I listened to a segment on NPR last week that talked about the lack of pure, altruistic, charitable giving in the United States . In its place has been self-gratifying or self-rewarding charitable giving—the kind that you receive tangible benefits in return — or no charitable giving at all. The benefits include trinkets which prominently display your generosities (like pink ribbons and bracelets for breast cancer donors), or being able to tout your givings as a corporation and thus making yourself more competitive, or donating solely for tax benefits, etc.
Throughout the year, I had donated several bags of clothing to local thrift stores, and given out soy joy bars to homeless people at traffic lights. I also dropped off several bags of toiletry items to a domestic abuse women’s shelter.
But I started to wonder — have I really given of myself?
When I donated those bags of clothing, it was more with the intent of cleaning out our closets so that we would not have to pack and ship more boxes. The soy joy bars were free items that I scored from playing the drugstore game. The toiletries were also from various free deals I gathered from CVS throughout the year.
I absolutely loved donating these items and it made me feel good to help others out, but besides a little time on my end, these items did not cost me anything. And if they had, I could have taken that cost as a tax deduction .
Is that truly charitable giving?
When I was fifteen, I approached my parents with the idea of adopting a child overseas. I was making my own money at the time mucking horse stalls, and so each month I would pay the money to my parents who would write a $15 check out to the organization, which clothed, schooled, and fed her. The child’s name was Belkis. One year for her birthday I sent an extra $10, and she wrote a letter telling me how she was able to purchase a pair of jeans with it. I felt such joy and compassion towards this child. By not sharing this with anyone, I did it for the right reasons (except my parents knew because they had to write the check each month).
Somewhere over the years even though my income has risen dramatically, I have managed to feel more scarceness than I did when I made $90 per week and supported a little girl overseas. I have given this some thought this holiday season, and have come up with a possible explanation. I am competitive at heart and so I don’t just want to save money, I want to save the most money. If I were to check ‘yes’ on my electricity bill to add a few dollars to the fund for people who cannot afford heating and lighting, then that would shave percentages off my money-saving margins that I tediously accumulated all month by unplugging power chords when not in use. If I were to give $1000 to a charity in in 2019, then all of the extra earnings I received would not have been added to my bottom line .
No matter what the reasons have been, I wanted to change this. I decided that in 2010, I was going to choose a charity or a cause, and donate consistently to it with actual money out of my earnings, and without sharing what organization/person it was.
And you know what? I did it. And still continue to do it.
What are some resolutions, or things you would like to improve upon in your own life for 2019?