5 Financial Resolutions That Never Work!

Set yourself up for success by avoiding these financial resolutions.

Whether you decided to put yourself on the path to better financial health this year or just want a better handle on your budget, it’s important to set yourself up so the money-saving goals you make can actually happen. Setting a few financial resolutions can be a positive thing, but they can also lead to a dead end if you’re too hard on yourself, unorganized or trying to accomplish everything solo.

Here are five financial resolutions that can be tough to stick to (and there’s no shame in that), and what you can do instead:

  1. Cutting out all discretionary spending
    Just like cutting out all sweets when dieting can backfire, so too can putting a freeze on all discretionary spending. Eliminating discretionary expenses can even trigger a spending spree, causing you to rebel against your own (pretty strict) rules. No matter how bad you’re trying to stick to your money-saving resolution, avoid making the decision to cut out all extras.

    Try this instead
    When working on your financial resolutions, prioritize your budget and set aside a ‘splurge’ fund so you have some freedom to spend—within reason—on items that aren’t necessities. These can be like a treat or ‘cheat meal’ in your otherwise-strict diet so you don’t feel deprived and vulnerable to a spending spree.

  2. Setting unrealistic or vague goals
    Saving just to save might sound good in theory, but without specific money-saving goals and the ability to track your progress, you can easily lose momentum. Set a goal and budget around it.

    Try this instead
    Figure out how much you can realistically save, no matter what other expenses might crop up. Put that money in savings before spending on any discretionary expenses.

    To make hitting your money-saving resolution even easier, you can also:
    1. Mark your calendar with specific goals to reach by certain dates to help monitor your progress.
    2. Be specific about what you are saving for to help you keep your eyes on the prize.
    3. Pay attention to all bill due dates and minimum payment requirements so you don’t hurt your credit score while working on your money-saving goals.
  3. Going it alone
    If you’ve decided to navigate the financial waters alone, you may end up sinking sooner than later due to lack of accountability. It will be easier to reach your money-saving resolutions when you have somebody you can regularly check in with or even turn to for guidance.

    Try this instead
    Consider working with a Certified Financial Planner (CFP) or Certified Public Accountant (CPA). You can also team up with a friend you trust who is trying to improve his or her finances so you can share your goals and keep each other accountable with your financial resolutions.

    You can also:
    1. Use apps like Clarity Money or Mint to keep track of your spending and find ways to cut expenses.
    2. Read books or tune in to podcasts about money management and budgeting.
    3. Attend budgeting and financial management workshops or classes to get advice and guidance.
  4. Maxing out your budget with retirement contributions
    Conventional wisdom tells us we need to start saving for retirement early and max out our contributions every year; however, many people fail to address some other critical aspects of their finances. It’s great to add money to your 401(k), but if your car breaks down or the roof starts to leak, you won’t want to make early withdrawals and assume the tax consequences.

    Try this instead
    First prioritize contributions to an emergency fund and cutting monthly expenses. Next, it’s time to calculate how much you can afford to contribute to retirement. It’s also a good idea to make sure those assets are invested in a way that’s aligned with your age, goals and risk tolerance.

  5. Neglecting your credit score
    While you’re busy building up those reserves to reach your money-saving goals, don’t overlook your credit score. You need to build and maintain a healthy credit score so you can qualify for lower interest rates on home and auto loans. . If you’re not paying your bills on time or are increasing your debt in order to build up your savings, you may consider reprioritizing in order to strike a balance.

    Try this instead
    While you are working toward your money-saving resolutions, take a look at your credit repost so you know where you stand. While you’re at it, make sure to check your report for any inaccuracies or discrepancies.

Bring on the financial resolutions

From cutting out one too many expenses to tackling your money-saving resolutions solo, there are several traps you want to avoid when you’re trying to get a better handle on your finances. Make your money goals smart ones that stick so you’ll be in a better position to achieve your financial resolutions this year.

My MoneyDesktop at WKFCU

My MoneyDesktop is a free feature of Internet Teller. This is a Personal Financial Management tool, that helps you budget and manage your finances. It allows you to bring together all of your accounts, from various institutions, so you can see your balances and transactions all in one place. From credit cards to mortgages, to investment accounts, you can track your spending, work with budgets, manage debt and much more.

(Partially reprinted from discover.com)

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