Let the champagne flow! (well, in 3 more days at the stroke of 12:01, anyway...)

Every year millions of people make a new year's resolution. Some people want to lose weight. Other people want to work out more. And still others make a financial-related new year's resolution.

There's nothing wrong with a resolution at the start of the new year. The problem is that many people make resolutions without setting goals or making a formal plan. In personal finance, this is disastrous.

The first step in making a financial-based new year's resolution is to make goals. Goals like "I will save more money this year" are generic and virtually meaningless. Make specific goals.

I can't overstate this enough: MAKE SPECIFIC GOALS. The more specific your goals, the better. Give yourself examples of what you will do. Incidentally, this will also make the process of budgeting much easier too, because you won't have to fight yourself to stick to it.

"I will stop spending money on Starbucks coffee in the morning" or "I will only eat out once a week" or "I will cancel 2 of my 10 magazine subscriptions. Those are real goals. They don't sound like much, but they are the true resolutions that will make saving money much, much easier in the long (and short) run.

Until next year!

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This entry was posted on December 28th, 2009 by David C Lewis, RFC. Edits may have been made to keep this entry current. · No Comments · Philosophy In Financial Planning, Psychology In Financial Planning