As 2015 draws to an end, you likely have had two thoughts cross your mind: you spent way too much on the holidays, and you need to set some New Year’s resolutions to keep your spending on track.
With this in mind, take the bull by the horns and decide today to take control of your financial situation by making 2016 the “year of the budget.” As you work toward getting out of debt, repairing your credit, and managing your finances you will likely see improvements in other areas of your life as well.
Here are some suggestions for setting financial resolutions for 2016.
Stick to the SMART rule
The key to accomplishing your goals is setting the right ones from the start. Following the SMART principle of goal setting will make sure you’re set up for success. SMART stands for:
S – Specific
M – Measurable
A – Achievable
R – Realistic
T – Time-bound
Setting the goal of “This year I will get out of debt” doesn’t include a plan or any concrete actions for success. Instead, an example of a SMART goal would be: “I will pay off my credit card by November making monthly payments of at least $50 on the 1st of each month.” This goal is specific – paying off the credit card debt; measurable – with a pre-determined amount to be paid; achievable, assuming that this amount was set after considering other financial responsibilities and factors; realistic because it’s just one credit card as opposed to an entire load of debt, and; time-bound, with the deadline being November. And if paying off your credit card is something you’re interested in, check out these valuable tips for paying off your credit card.
As you begin paying off debt and becoming better at sticking to a budget, you will find it almost a thrill to see the money sticking around and the debt going down. The best way to get this thrill and keep your momentum going is by starting small. Pay off your smallest debt as quickly as realistically possible. Once you see that balance as $0, you will be determined to get rid of your other debt.
Your goals don’t all have to be about damage control. Set a goal to take a trip or purchase something you’ve always wanted without going into debt for it. Perhaps the savings from paying off your debt or sticking to your budget will be enough to set aside for these rewards. Freeing up your money and being able to live without the fear of collectors and damaging your credit will be reward enough, but having the control to do with it what you please will contribute to that feeling of excitement that comes with becoming debt free.
Recruit a Partner
Having a support system in place will make reaching your goals even more doable. The added measure of accountability and guidance will help keep you on track and encourage you when you’re feeling weak. If you’re married, setting these goals together will also help improve your relationship as you work together toward a common goal.