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Many of us can’t wait to see 2020 come to an end. But the start of December means it’s time to start thinking about financial matters you need to improve on in the coming year. You could resolve to add $10,000 to your savings account, or max out your 401(k) — but those are some pretty lofty goals. Instead, you may want to focus on the following resolutions, which are much easier to pull off.
1. Follow a budget
I’m not going to beat around the bush: Budgeting can be boring. But it’s also necessary. Without a budget, you’ll have no idea where your money goes every month, and that’s knowledge you should have — it’ll help you make smart financial decisions.
If you’ve never followed a budget, carve out time to review your credit card and bank account statements and see what your monthly expenses really look like. Then compare those expenses to your paychecks to see what savings opportunities you have. Writing down your expenses may shed light on where you’re overspending (for example, if your car payment is $400 a month but your take-home pay is only $2,000), and prompt positive changes in the coming year.
2. Waste less money
It’s one thing to spend money you can’t really part with on things you get good use from, like a nice car you drive every day, or a purse you lug all over town. But it’s another thing to effectively throw your money away with wasteful habits. (To be clear: The former is not recommended, but it at least makes sense.)
That’s why you should pledge to avoid wasting money in the coming year. If you toss out spoiled food most weeks, get better at grocery shopping. If you’ve spent the better part of 2020 paying for a gym you rarely visit or a music streaming service you don’t listen to, cancel those recurring bills. Even if that only ekes out modest savings, it’s still worth it.
3. Avoid impulse purchases
Impulse buys are a major budget-buster, and they’re dangerously easy to fall victim to. But there are a few things you can do to steer clear in the new year.
First, don’t browse online retailers when you’re bored. You’ll just open the door to needless spending. Next, don’t store your credit card details on your phone, tablet, or laptop. If you’re relaxing in bed by looking at your phone and you’re tempted to buy something, you’ll probably think twice if you have to drag yourself down a flight of stairs to dig up your credit card information.
Finally, follow the 24-hour rule. When you’re tempted to buy something out of nowhere, force yourself to wait a full 24 hours before completing that transaction. Much of the time, you’ll forget about the item or realize you don’t want or need it.
Just as it’s common to pledge to be healthier via better eating and exercise, many people promise to improve their finances. And while it’s OK to set substantial goals, the above resolutions are fairly attainable. Combined, they could change your financial picture for the better.