How should we start writing our last post of the decade about financial resolutions for 2020?
Just like that, we guess! The 2010s have flown by, and we hope they’ve been good for you. We’re sure there have been ups and downs; we know our audit defense and liability defense clients have dealt with the uncertainty of dealing with the IRS, and we’re so glad they enlisted us to help them through the process.
But your path to financial freedom doesn’t just start when you run into tax issues. In fact, this time of year is among the most popular for setting financial goals and resolutions. Even more so, this New Year marks a new decade!
Which financial resolutions do you want to accomplish in 2020? What about during this decade?
Maybe you’d like to save up for a home, travel more, start a college fund, or climb your way out of tax debt or student loan debt. Whatever your plans for 2020 and beyond, you need to set up some habits to get you there.
Humans truly are creatures of habit, but we tend to have a problem with the ones we start on January 1st. Most of us set way too many goals!
For instance, take the resolution, “I want to be healthier.”
We say we’ll wake up early, go to the gym every morning, and never eat fast food again. That’s admirable, but it’s a bit too much all at once. Not only is it easy for us to fall off our strict new plan, but also, once we do, we feel bad about ourselves and we give up entirely. That’s why some experts estimate that 80% of resolutions fail!
It may seem counterintuitive, but one way of reaching your big goals is by starting—and cementing—much smaller habits you can build upon over time. Don’t start with 6am workouts; instead, try waking up 15 minutes earlier than you usually do and starting your day with a walk. Once you’ve done that for a few weeks (or months), you can add in something else, and your habits will build upon each other.
Simple habits may just be the key to your financial goals, too. They won’t seem huge at first, but just like interest, they’ll add up over time.
With more and more shopping and payments being completed online, it’s easier and easier to lose a connection with your money. If you want to cut back on your usual spending habits, you need to reconnect with your spending.
On payday, try withdrawing a predetermined weekly or monthly budget from the bank, then paying for your usual purchases—groceries, date night, gasoline—with cash. Paying with cash instead of debit cards will offer you visual idea of how much you’re spending, and it’ll be hard to ignore that you’ve exceeded your budget when you run out of cash early!
Most financial advice falls into one of two categories: spend less and save more. However, the habits for getting there can be more challenging, and occasionally, recommendations like, “Save 20% of every paycheck,” simply aren’t possible on your budget.
If you’re working with a smaller budget, it’s time to go old school with saving—and try a piggy bank. At the end of each day, make a habit of placing any change you’ve accrued into the jar along with a dollar bill (or a five dollar bill!). It’s a small amount, sure. But it will help you make saving money a habit, and you can build from there!
If you’ve ever pledged to stop buying fast food, to eliminate your online shopping, or to cut out your morning Starbucks trip, you know how hard that can be in practice.
Instead of casting such a wide net and running the risk of feeling like you’ve failed your new spending resolution, try starting with just one purchase and building from there. If you typically visit Starbucks on your way to work, try switching to the coffee at work or brewing your own. Even allowing yourself one weekly trip on Fridays will still save you money—and it’ll turn your coffee into a reward for a week’s hard work.
We talk about organization a lot—and for good reason. When your finances are disorganized, you’re more likely to feel stressed out or miss the tax deadline entirely!
Try starting a tax file to turn those negative habits into positive ones. You don’t need to go overboard to start with! (We’re number nerds, but we realize we’re in rare company!) To kick off your new tax habit, just designate one or two file folders where you can place receipts, tax documents, Goodwill donation forms, etc. Once a week, update it; you’ll save time when tax season comes around, and that organization will start to creep into other aspects of your finances!
It seems like all the healthiest or most beneficial goals are the least fun ones. When we eat healthy for a week, we may feel less sluggish when we wake up in the morning—but when we have a cheeseburger, we feel good instantly (even if it’s a short-term feeling).
So, how do we inject some fun into the less-fun habits? By celebrating! Our brains are looking to be rewarded for our behavior, so when you skip your morning Starbucks trip or place your week’s receipts in your tax file, give your brain a good feeling to attach to it. You can do a dance or give yourself a pep talk in the mirror; whatever makes you feel genuinely happy will help you lock in your new habits!
Our big financial goals are built on our financial habits, so it’s important we support them as best as we can. Sadly, we have a tendency of shooting for the moon and getting frustrated if we don’t reach it.
By choosing tangible, small financial habits, we remind ourselves that the journey to your financial goals starts with a single step. By building the right habits in 2020 and keeping at them, you can reach new heights. We just know it.