Goal-Setting

4 Smart Financial Moves to Start the New Year

4 Smart Financial Moves to Start the new Year

While there is no rule set in stone that all goals must be made by January 1, there is something about starting a new year with a clean slate. Many people make some sort of New Year’s resolution around money. Most are forgotten by January 2. šŸ™‚ Let’s make 2014 the year where you keep your resolution to take back control of your finances.

4 Smart Ways to Take Control of Your Financial Lives this Year

I fully believe within all of us exists a person who wants to own their financial lives. At the same time, we are also creatures of habit who will resist (sometimes even unconsciously) making the necessary changes. Before you begin, you must identify your pockets of resistance and address them now. Otherwise it will be much harder to achieve your goals.

1. Set Realistic Goals and Regularly Review Them

I love goal-setting. Dreaming about what I want to accomplish is a lot of fun. Most people enjoy identifying their goals but then stop there. While dreaming is an important step, it’s not the only one you need to take.

  1. Identify Your Goals: What do you want to accomplish this year and long-term? Your goals should be realistic but also a bit of a stretch. Feeling a sliver of pressure to achieve them keeps you focused and motivated. Be sure to write your goals down and ideally place your them somewhere visible.
  2. Create and Execute Your Plan: Once you know your goals, figure out the steps you need to take to achieve them. Be very specific and set reasonable deadlines to complete individual steps. One of the biggest mistakes I see is people don’t create specific action steps and spend a lot of time on activities that don’t move them forward. Or worse—take no action. It won’t happen on its own.
  3. Review and Reassess Your Goals Regularly: I encourage you to review your goals quarterly. Make sure your actions are driving the results you want. You may need to do some course correction or you may even find you need to fine-tune your goals a bit.

Success Tip: Be sure to share your goals with your family and get their buy-in. It’s much easier to reach goals when your family is working together to achieve a common goal(s). It also makes it much easier for kids (and adults too) when money has a purpose, and can be used to weigh against things they find at the store. Use this as an opportunity to demonstrate good financial behavior to your kids.

2. Learn to Live Within Your Means

The only way you can accurately do this is by following a budget. Budgets may be a dirty word in some households, but it’s time to let go of old beliefs and develop a budget mindset. Budgets don’t have to mean deprivation and can instead represent freedom. It begins by knowing how much money comes in and goes out. If you find your spending more than you make, you need to make some decisions on what stays and what you eliminate. Start with the low-hanging fruit first, such as canceling a gym membership you haven’t used in two years and go from there. Once your budget is under control, you can chose how to spend your discretionary money on the things that matter most to you without creating new debt.

3. Eliminate Consumer Debt

This is always a popular goal and an incredibly worthy one too. It is also a hard one because you have most likely become accustomed to a lifestyle of saying “yes” to everything you want. No one likes to feel deprived and when you’re eliminating debt, it may feel like fun is off the table. So let’s get real. Consumer debt is NOT FUN. You may feel like you have freedom, but it is an illusion. What you have is a growing liability that puts your financial security and family at risk. I have watched too many people fall off their own fiscal cliff and can assure you it was not fun.

I won’t pretend that it’s easy, but your hard work and temporary, austere lifestyle is worth being debt-free and truly having financial freedom.

  1. Calculate Your Consumer Debt: Many people don’t actually know how much money they owe. Why? Because ignorance is sometimes bliss. Don’t let yourself fall into that trap. The sooner you tackle your debt—the better.
  2. Look for Waste in Your Budget: Go over your budget and be ruthless. Now is the time to educate yourself on how to save money. Look for ways to reduce food waste and your grocery bill. Find free or cheap entertainment options, etc. There are so many blogs sharing great ideas on how to stretch your budget. Find and follow them.
  3. Earn Additional Money: To truly expedite your debt reduction, you may need to find additional money. It may be selling unwanted items on eBay or Craigslist. Or taking on a second job or side hustle. This isn’t always easy but remember it is temporary and paying off your debt as quickly possible is worth it.

Success Tip: Be very clear on why eliminating debt will benefit your life. For some, being debt-free is enough motivation. Others will need to have a clear picture of what life will be like once they have financial freedom to stay motivated. Remember, debt didn’t happen overnight and eliminating it won’t happen overnight either. Staying motivated and focused is key. Talk to your family about debt to get their support and make the journey a bit easier.

4. Become Financial Literate

The reason most people need to make New Year resolutions about money is because they are not financially literate. Most of us grew up in homes where money was a taboo topic. It’s time to break the cycle and start openly talking about money and educating yourself on how to use it in alignment with your values and goals. Money is emotional and too many of us associate fear, guilt and greed with money. I was taught money was a gift and dedicated my professional life to helping others use their money wisely on what brings them the greatest joy in their lives. And it starts by becoming financially literate. Educate yourself, your spouse or partner and your kids about money. This is an ongoing process and one of the greatest gifts you can give yourself and your family. Everyone handles money and having the confidence to make smart decisions with your money is key to long-term financial freedom.

What Are Your Financial New Year’s Resolutions?

Follow these steps and you’ll join an elite group (only 8%) who keep their New Year’s Resolutions. Even more importantly, you’ll have taken back control of your finances and can really focus on the things that matter most to you. What are your financial resolutions this year?

Shannon

Image courtesy of www.freedigitalphotos.net.

The Heavy Purse Store is now open! My new downloadable Money Club Workbooks are now on sale. Each workbook provides five targeted lessons to help you raise Financially Confident Kids. Please check them out in The Heavy Purse Store.


January 6, 2014  •  54 Comments  •  Goal-Setting

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  1. Monday, January 6th, 2014
    I love making stretch goals and mapping out all of the little steps along the way. I have a love/hate relationship with deadlines though. Sometimes I find them to be really helpful, but other times I prefer the approach of simply picking one thing at a time to really focus on and sticking with it until it's done. Deadlines can be hard to set accurately, so I try to mix and match approaches depending on what it is I need to do.
    • Shannon
      Monday, January 6th, 2014
      I'm big on stretch goals too. Otherwise I find it's easy to procrastinate if you think your goals are easily achievable. :) Deadlines can be tough. You definitely have to balance where you're flexible and give yourself time to do steps right but at the same time - keep moving forward.
  2. Monday, January 6th, 2014
    I have to say #4 is my favorite here. Financial literacy, I feel, has saved our lives. We no longer view budgets as bad, but as a key to achieving our dreams. Our 2014 goals are to continue cutting spending and knocking out debt. :-)
    • Shannon
      Monday, January 6th, 2014
      It's my favorite too, Laurie! :) Financial literacy makes a huge difference in people's lives and it's not as difficult as people imagine. Love that you and your family have embraced budgets. They are key to achieving your dreams and truly represent freedom, rather than restriction when don't right. Good luck with your 2014 goals - I know you'll do great!
  3. Monday, January 6th, 2014
    Great list Shannon and, of course, I agree with all of them. :) I think #1 is so important because many set some pie in the sky goal...err resolution... and do little to check in on it. I say make it quantifiable, something you're including others on and check in on it regularly. It doesn't guarantee success, but you're much more likely to reach it in my opinion.
    • Shannon
      Monday, January 6th, 2014
      Yes, so many people set goals without making a true commitment to them. They would certainly love to achieve them but they don't have a plan in place to do so. I absolutely agree that making it quantifable and involving others definitely increases the likelihood of success. It becomes real when you tell others about your goals.
  4. Monday, January 6th, 2014
    So glad you mentioned financial literacy again :) I definitely think people need to become life-long learners, and finance needs to be at the top of the list.
    • Shannon
      Monday, January 6th, 2014
      You know me—it's my favorite topic! :) I agree, people need to become life-long learners of money and given how money influences almost every aspect of our lives - it's sad that so few people are financially literate.
  5. Monday, January 6th, 2014
    I didn't really have any resolutions. I just want to make 2014 the best year it can possibly be! Our goals are basically more of the same. Boring, I know, but it's true!
    • Shannon
      Monday, January 6th, 2014
      Sounds like a very worthy goal, Holly and one that I share!
  6. Monday, January 6th, 2014
    #2 is my favorite on the list. If you don't have the money then you shouldn't be spending it. Seems simple but our culture tempts us towards other patterns of behavior. Our two big financial resolutions for the year are to finally pay off our mortgage and to begin making income off my blog. I know the second part of that won't happen overnight and will take a great deal of effort.
    • Shannon
      Monday, January 6th, 2014
      So true, Brian! It would seem like common sense not to spend more than you earn but our culture definitely encourages you to do otherwise. It wasn't that long ago when people would not have never considered taking loans for vacations, clothes and gadgets, which is essentially what we do when we carry a balance on credit cards. Great resolutions/goals! I have no doubt you'll be able to earn income from your blog!
  7. Monday, January 6th, 2014
    This is a great list and I agree that you cannot just set goals, but you have to review them. It's like deciding to lose weight but never weighing yourself. How do you know if you are losing weight or not? I tell clients to add monthly calendar reminders to outlook or gmail for financial "check-ins."
    • Shannon
      Monday, January 6th, 2014
      Thanks, Shannon! Exactly! If you don't review your progress while dieting - how do you know if it's working? Same principle here. Love the idea of adding monthly calendar reminders to financial check-ins. I actually find it very motivating to review my goals and see my progress.
  8. Monday, January 6th, 2014
    Eliminate consumer debt is on my list this year! It'll be tough, but I am determined :)
    • Shannon
      Monday, January 6th, 2014
      An incredibly worthy goal, Mackenzie! It is a tough goal but I am confident you can do it! :)
  9. Monday, January 6th, 2014
    Love your steps, Shannon, especially number 4! Last year, I felt like I started to understand what it means to be financially literate, but this year I'd like to hone those skills and really comprehend it. I agree that budgeting (and tracking) was really helpful for me - it helped me really think about purchases knowing that I had to manually report it on my spreadsheet (even if it was only to myself)! Accountability is crazy like that. ;)
    • Shannon
      Monday, January 6th, 2014
      Financial literacy doesn't happen overnight nor is it ever really "done" but you definitely come a long ways on your journey, my newly debt-free friend! Accountability really makes a difference. Once you start tracking, you can't pretend or ignore months where you overspend. It definitely does make you think about your purchases. For me, having goals is what helps me not feel deprived when I have to tell myself "no" because I know I am saying "yes" to something that means more to me and my family.
  10. Monday, January 6th, 2014
    #2 is definitely the most important for me, it's such a simple concept to live within our means, but it is so easy to spend way more than we can afford, I think it's about breaking out of that 'entitlement' way of thinking, and focusing spending on the necessities, rather than a scatter-gun approach to spending - which I've certainly been guilty of in the past!
    • Shannon
      Monday, January 6th, 2014
      It is such a simple concept but as you said, it doesn't mean that it's always easy to follow. We live in our world that embraces and encourages people to live beyond their means and to tell themselves to say "yes" to everything they want. Once we do break that "entitlement" way of thinking and really figure out what we really want in life and focus on that, it makes a huge difference.
  11. Monday, January 6th, 2014
    Great tips Shannon! We eliminated our debt a few years ago so right now our biggest problem is sticking to the budget. this year I want to track our spending more in hopes that we stick to it.
    Have a great week!
    • Shannon
      Monday, January 6th, 2014
      Thanks, Corinne! It isn't always easy sticking to a budget, but tracking your spending will definitely help you. You'll see if you need to make adjustments to your budget, perhaps you're too rigid, or maybe you are spending more in an area than you'd like to. You have a wonderful week too!
  12. Monday, January 6th, 2014
    I take it a step further and analyze my goals and review my financial situation every month. I need to constantly assess it all the time as a freelancer. All great tips as usual Shannon!
    • Shannon
      Monday, January 6th, 2014
      It absolutely makes sense that you would review your financial situation every month. Freelancers or self-employed individuals can have a very fluid income and definitely need to stay on top of it. :)
  13. Monday, January 6th, 2014
    Hi Shannon!

    Out of these 4 points, I have to become more financial literate and your post reminded me to reevaluate our goals for this year.

    We paid off some bills this year so we need to look at how much we'll save a month and put it away or toward college.

    Hope you had a great weekend! Have a great new week lady!
    • Shannon
      Monday, January 6th, 2014
      Financial literacy is so important and becoming financial literate will change your life. That's fantastic you paid off some bills and have freed up some money to go towards your children's college education! It's a great that your kids are seeing you make these positive changes. It will influence how they handle money too. I know you're already seeing that, which makes me so happy!
    • Sunday, January 12th, 2014
      It sure has Shannon.

      Marisa got her first job and she's asking me about a savings account and helping us pay for her Senior Trip to Germany next year.

      It is a great feeling knowing she'll be better off than I was at her age.

      Thanks for all your great tips! Have a great new week!
    • Shannon
      Sunday, January 12th, 2014
      I love that Marisa wants to open a savings account and help use part of her earnings to pay for her trip to Germany next year. That is fantastic! :) I'm sure you are one proud Mom! I hope you had a great weekend too, Corina!
  14. Monday, January 6th, 2014
    Having steps to a goal is so important. Saying you are going to lose 50 pounds but having no idea how you want to do that is a recipe for failure. My big goal for last year was to get the business sold, so I haven't really sat down and mapped out this year, but I think continuing on the same path we've been on will be most of what we hope to accomplish.
    • Shannon
      Monday, January 6th, 2014
      So many people set a goal and forget to make an action plan to achieve it. It won't happen otherwise. Selling your business was a huge goal and I'm glad you achieved it. You're going down a great path and I am sure 2014 will be another fantastic year for you and your family.
  15. Tuesday, January 7th, 2014
    "Review and Reassess Your Goals Regularly: I encourage you to review your goals quarterly"

    I would suggest monthly. Every month you should be doing at least one thing that will help you reach your goals.
    • Shannon
      Tuesday, January 7th, 2014
      Absolutely. People need to set actionable steps to reach their goals and follow through with them. Setting up regular review helps ensure that you are moving forward.
  16. Girl Meets Debt
    Tuesday, January 7th, 2014
    I'm working on #3 and will be working on it for another 3 years...but on the plus side, at least its not consumer debt. ;)
    • Shannon
      Tuesday, January 7th, 2014
      Eliminating your consumer debt last year was a massive achievement, GMD! Student debt is certainly no fun but I know how diligently you're working to get eliminate it and it will be gone before you know it. :)
  17. Tuesday, January 7th, 2014
    My resolution is to track every penny I spend so I can create an even more effective budget and plug any leaks.
    • Shannon
      Thursday, January 9th, 2014
      Sounds like a great resolution, Erin! We all have a few leaks and tracking is definitely the best way to identify them. Good luck! :)
  18. Wednesday, January 8th, 2014
    Great points. I think you need to get involved in all of your points above if you are serious about getting ahead financially and taking control of your own finances.
    • Shannon
      Thursday, January 9th, 2014
      Thanks, Glen! There is nothing more important that getting in control of your finances. It takes some work but it's definitely worth the effort.
  19. Wednesday, January 8th, 2014
    Great points Shannon. As someone who actually didn't know the extent of my debt, I can't stress enough the importance of facing up to consumer debt and eliminating it. As for fun being off the table when paying down debt, yes this is true, but then I find paying off debt fun nowadays! How things change! My financial goals for 2014 are to reduce my debt by Ā£13K and save more for retirement. Now I just need to work out how.
    • Shannon
      Thursday, January 9th, 2014
      Thanks, Hayley! You were definitely not alone. A lot of people don't realize the extend of their debt. It's great that you're diligently working towards eliminating it. And yes, watching your amount of debt decrease IS a lot of fun. :) It's amazing how our perspectives changes. Good luck with your 2014 goals and seeing your debt decrease!
  20. Thursday, January 9th, 2014
    I completely agree with you on getting your family on the same page as you with regards to your goals. It's much easier when you have some kind of support to motivate you to reach your goals.
    • Shannon
      Thursday, January 9th, 2014
      It really does. Having that united goal to work towards really helps bring the family together and sets a good example for our kids too.
  21. Thursday, January 9th, 2014
    Hi Shannon,
    Definitely financial literacy because you can get out of debt and still have bad habits. Within a little while you'll end up back at square one.
    • Shannon
      Friday, January 10th, 2014
      Hi Charles - you are absolutely correct. Not being in debt does not necessarily make you financially literate. Sadly, so many people get themselves out of debt, only to fall back into debt at a later date. Becoming financially literate can definitely help them repeat old mistakes and learn a different way to think about money.
  22. Friday, January 10th, 2014
    Hi Shannon,

    I think I need to educate myself about being financially literate too, and though one thinks one knows it all, but there are many places and instances where we can save, if we think about it. Yes, making your financial goals for the year is very important, why just the year - per week if you set your goals, your monthly expenses are very much in control, aren't they, which all adds up to your aim to spend within your required budget for the year. We do a lot of it that ways and it works. :)

    Thanks for sharing. Have a nice weekend, and Happy New Year :)
    • Shannon
      Friday, January 10th, 2014
      Hi Harleena, Financial literacy is definitely important and there many places where we can save a bit a money. And also ensure through our budget that we are spending our money on the things that truly matter for us. Often times, we people start tracking their expenses, they are surprised on some of the things they spend money on. It's a great way to see how you use your money and redirect money towards the things that mean that most. You have a wonderful weekend and Happy New Year to you and your family too!
  23. Friday, January 10th, 2014
    So important, Shannon! Educating yourself about money is easier with the internet, but there are books at the library that can help also. I love that you said to develop a budget mindset. That can be difficult for some to do, but taking a hard look at your budget certainly helps! I like to think of things in terms of how much value I get for the money. As long as you don't try to convince yourself that everything (including that $400 purse) is an "investment." That's when you have to move your mind to budget mode!
    • Shannon
      Friday, January 10th, 2014
      There are absolutely great books at the library too that can really benefit us too. Yes, changing from a spending mindset to a budget one takes some time but it's worth it. I really think it's about changing perspective too. People automatically assume budgets must be complicated and hard and that is not true.
  24. Sunday, January 12th, 2014
    Hi Shannon,

    Great success tips on finance. I was one of those gals who grew up in a home where talking money and finance was taboo for sure. It took me a while to get comfortable in a relationship talking about this topic. I'm glad that I have learned that I needed to teach my children to be ok with understanding and talking finance. Also, I think a great resource to become better at this is to stop being illiterate about it. I became comfortable by educating myself through great financial websites and resource tools.

    Irish (Lisa)
    • Shannon
      Sunday, January 12th, 2014
      Hi Irish,

      It's a common practice to avoid talking about money in families and hopefully we can break that cycle. Everyone handles money in their lives and needs to feel confident in their money decisions. I'm glad you took control and became financially literate. More importantly, passed that knowledge onto your kids!
  25. Sunday, January 12th, 2014
    Great post, Shannon. This is a great no nonsense list for grabbing your finances by the horn.

    I know that when we made the decision two years ago to get rid of debt from our life, it was one of the best decisions we ever made.
    • Shannon
      Monday, January 13th, 2014
      Thanks, Jefferson! Yes, getting rid of debt is one of the best decisions a person can make. :)
  26. Thursday, January 16th, 2014
    I'm getting married this year so I would like to at least cut my debt in half. Which means I'll have to be super focused and make sure I'm not spending money that I shouldn't. Like Starbucks. I don't even want to admit how much money I've spent on Starbucks this year. My friend bought me an Italian stove top espresso maker so I will be making my own coffee this year.
    • Shannon
      Thursday, January 16th, 2014
      You have an excellent reason and motivation to help you eliminate debt, which is half the battle, Areles! It's great that your friend bought you an espresso maker. She knows you well! :)
Shannon Ryan SHANNON RYAN, CFPĀ®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.ā€ - Shannon Ryan
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