There is no doubt that December is a busy time of the year. We just finished Thanksgiving with Christmas and New Year’s right around the corner. We have friends and family to visit and gifts to buy with little time to reflect on the past year. In the busyness of the season, the last thing on your mind is likely what your finances will look like next year.
There is one small problem with that cycle. We put off what we want to accomplish by kicking our finances down the road to deal with later. The problem? “Later” either never happens or we end up foolishly wasting money we had no business spending. If you want to be more purposeful with your money next year, consider some of the following things when assessing the past year.
Make Goals, Not Resolutions
New Year’s resolutions are a popular topic around the beginning of the year. It’s the beginning of a new year and many want to start with a clean slate. There is nothing wrong with that at all. Statistic Brain reports at least 45 percent of Americans make New Year’s resolutions, with money-related ones coming in third place.
There is one small problem. Only 8 percent of those resolutions are actually achieved meaning a vast majority of individuals don’t reach what they want. There may be some reasons for this problem. I believe it comes down, largely, to two things – lack of focus and unquantifiable goals. When you add a specific focus, and make it quantifiable (as goals can be), you make your goal that much more achievable. Thankfully, money issues lend themselves to being simply quantifiable and thus easier to focus on.
Challenge Your Expenses
As you begin to focus on your goals for the upcoming year, it’s best to concentrate on what you spent this year. This is a key part to frugality, as you always want to make sure you’re receiving value for the money you spend. While painful, don’t overlook what expenses to cut.
Everything should be on the table, regardless of the amount spent on it each month. Consider some of the following items to cut:
· Auto insurance. When was the last time you compared rates for your area and coverage needs? You may not save a lot, but why pay more than you have to?
· Cell phone bill. The average cell phone bill through a major carrier is close to $150 per month. That’s $1,800 per year. There are many non-contract options available that can save you upwards of $100 a month, if not more.
· Grocery bill. The USDA reports an “average” family of four spends anywhere from $650 to $1,300 per month on groceries. Where do you fall in that range? You may be overlooking ways to save money each month.
· Cable bill. The Leichtman Research Group reports 83 percent of American households have some form of cable television. They also report the average monthly bill is $99. There are many ways to cut this cost and not sacrifice much of the content you consume.
There are many other expenses you can challenge. The list is only meant to give you an idea of what kind of money can be saved. You may not be able to cut each expense, but it will give you an idea of where your money is going and the value you receive for each expense.
The Planning Starts Now
It may seem odd to make financial goals during the holiday season. I believe it’s the perfect time to start planning out goals. You are likely out and spending money. If you’re like the “average” person, that means you spent close to $900 last year on Christmas shopping. Did you budget for that expense, or will you finance it? If it’s the former, great, if it’s the latter you’ll possibly be paying for that for months to come.
The holidays are not a surprise. Much like spending on everyday items you commonly use. We know they’ll be coming, we know what they may cost and we know what they’ll require from us. By planning now, you can set yourself up for success and be more purposeful about your spending, which is really what we should want in the first place.
The end of the year is a fun time. It’s also a busy time. Don’t let the time slide by. Instead, use it to set quantifiable goals that will help you be purposely frugal and put your money to better use throughout the year ahead.
Culled From: USNEWS.COM
Written By:John Schmoll is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting and frugal living. He is a father, husband and veteran of the financial services industry who’s passionate about helping people find freedom through frugality.