3 Easy Financial Resolutions Every Gen Y should follow

Enough about my resolutions, lets talk about your possible resolutions.  Sorry, I hope you're not “resolutioned” out, but with a New Year comes new beginnings and fresh starts, so I want to take advantage of this.

Judging from the amount of traffic some of my personal finance blog colleagues received on the first few days of New Years, and how my friends have all been telling me that one of their resolutions this year is to be smarter with their money, I know that people are interested in some financial goals for 2011.   Especially us young people.

So I thought I would share some financial goals that I think are an easy and painless (key words- easy and painless!!) way to start being smarter with your money.

Easy New Years Resolutions that Every Twenty Something should follow:

  • savings Pictures, Images and PhotosWrite down what you spend your money on– if you only do it for a month, that's fine, but it's just to get an idea of where you spend your money.  It's sort of like a diagnosis of your money woes.  You don't know where you're spending your money on, so you need to find out.  Keep your receipts.  You'll be surprised at how much little, seemingly unimportant things can really add up (like those daily lattes!).
  • Make it Automatic–  Paying yourself first is BUY FAR the easiest way to save money.  You don't need to think about it, and you will feel “poorer” because there is less money in your main account, so you'll be less inclined to spend money.  It's like if there is this DELICIOUS looking cake in front of you, asking you to eat it, it's hard to say no and not have a slice.  If that cake wasn't there tempting you, it's easier to avoid eating it because it isn't there.  We can't help it.  It's human nature.  Even the most disciplined saver will benefit from making their savings automatic.  It really works- sort of like hitting two birds with one stone.  Set at least 10% of your pre-tax income to be deducted from your chequing account to a separate more inaccessible account (those online only accounts are good for that!  I use ING and Manulife).  The current savings rate is about 0.2%, so if you're saving at least 10%, you're ahead of the game.  You'll definitely thank yourself for it later.  This is how I started… (sorry, I think I am sounding a bit like an infomercial now… but really, I think this is the way to go!).
  • Make a budget- Budgets are sometimes hard to follow, but they are a good guideline to go by, so you know roughly how much you should be spending on certain categories.  Following a budget is easier as you get used to living with one.  Squawkfox (a fellow BC, Canada Personal Finance Blogger named by Globe and Mail as #1 PF blogger) has an easy spreadsheet you can download (and it's free!).  Make sure you include debt repayments in this budget.

There you have it.  These are three easy resolutions to follow so we can make 2011 the year of being smarter with our money.

Readers, do you have any financial resolutions you find easy and painless that you would like to add?

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Young is a writer and former owner of Young and Thrifty and the main "twitter' behind Young and Thrifty's twitter account. She lives in Vancouver, BC and enjoys long walks on the beach, spending time with her anxious dog, and finding good deals. If you like what you read, consider signing up for email updates.

30 Comments

  1. Fox on January 10, 2011 at 9:57 am

    I totally agree with you on all three, but love the last two. Paying your self and a budget, without a budget there is nothing.

    I am actually in the process of opening an account up and paying my self. ING is a great option, heard rave reviews about it.

    How do you like it?



  2. Jaymus (RealizedReturns) on January 10, 2011 at 2:58 pm

    Gen-Y.. “write it down”… does not compute. Is that an iPhone App or something?

    just kidding. good advice.



  3. SavingMentor on January 10, 2011 at 2:48 pm

    Simple no nonsense tips, I like it! I did all 3 of them for a while but now I pretty much only stick to number 2 on a regular basis.

    I did a full out budget for about 1.5 years to make sure I knew where our money was going and where we needed to cut back. After I felt I had it under control, I wanted the time back that I was investing in doing all that hardcore tracking, so I stopped for the most part.



  4. Sandy @ yesiamcheap on January 10, 2011 at 3:19 pm

    I’m all over the first two. The last one is tough. Making a budget takes too much time and energy and I’m almost embarrassed to say that I don’t have a physical budget. I just kind of know how much I’ve allocated for each area of spending per week and try to stick with that.



  5. Little House on January 10, 2011 at 5:56 pm

    Excellent tips for the start of a new year’s financial plan. Budgets can be fun, well at least for dorks like me who love excel! 😉



  6. young on January 10, 2011 at 9:10 pm

    @Little House- I’m jealous of your excel ability 🙂 I just recently learned how to “sum” numbers in excel!! 🙂 I stick to my paper budget, call me old fashioned 😉



  7. young on January 10, 2011 at 9:12 pm

    @Sandy- I totally know how you feel…! The only reason I have a semi-budget now is because I have recently started to use mint.com and it automatically categorizes my purchases into their respective budgets. Otherwise I am way too lazy and non-excel inclined to do anything about budgeting 🙂



  8. young on January 10, 2011 at 9:13 pm

    @Jaymus- LOL!!! So true of us Gen Y’ers! “Like…. hellooooo!!! Is there a like… app for that?”. I still get teased from my friends because I have a real paper calender I carry around LOL.



  9. young on January 10, 2011 at 9:16 pm

    @SavingMentor- Yeah, budgets are definitely time consuming that way. I definitely don’t do any ‘active’ budgeting per se, but instead I get it passively tracked with mint. Been working out okay so far… Number 2 is my all time favourite (can you tell? haha)



  10. young on January 10, 2011 at 9:18 pm

    @Fox- I like ING- am a sucker for their orange marketing. I like how they throw you good incentives too (like they had this promotion earlier, if you create a regular “pay yourself” amount for six months – e.g. $100 a month for six months, they will deposit $100 into your account). You can also get $25 deposited for opening up an account and if you refer others (e.g. your friends or family) you can get $25 too. I also like how you can name your goal/savings account. I named mine the “Travel/Kilimanjaro Fund” 😉



  11. retirebyforty on January 11, 2011 at 9:36 am

    Making it automatic is a great way to save. If you are not maxing out, then you should work on it. When you get a raise or any income increase, increase the auto deduction and you won’t even feel the pinch.



  12. Ana on January 11, 2011 at 9:25 am

    Thanks for the tips. Got any more.. I think I had those 3 in order!



  13. Cassie on January 11, 2011 at 3:49 pm

    I have the hardest time with the first one! I think I might make it a February goal to write everything down that month. This is kind of a weird month anyway.



  14. CreditShout on January 11, 2011 at 4:06 pm

    I live by the “always pay yourself first philosophy” and it really does work, especially if you can have a certain amount from a paycheck or checking account automatically added to a savings account every month.



  15. young on January 11, 2011 at 4:08 pm

    @CreditShout- Glad you agree 🙂 It really is so easy and effective- everyone should really pay themselves first.



  16. young on January 11, 2011 at 4:09 pm

    @Cassie- I understand! I was having a hard time with it too. In January, I now write it in my pocket calender I take with me everywhere. I just hope no one opens my calender to see how obsessive I may seem by writing down everything I spend money on.



  17. young on January 11, 2011 at 4:10 pm

    @retirebyforty- That’s a good idea too- increase the auto deduction to prevent lifestyle inflation from creeping up when you get a raise!



  18. young on January 11, 2011 at 4:11 pm

    @Ana- If you are really ambitious, then maxing out on what you can e.g. RRSP and TFSA if you’re Canadian and 401K and IRA if your’e American is a good tip too. 🙂



  19. Cowtown Realist on January 11, 2011 at 11:01 pm

    Great advice,

    I think the biggest thing for me last year was taking the time to learn and understand exactly how the TFSA works and to take full advantage of it.

    Too often I speak to people who use it merely as a savings account gaining only 2% interest (that’s less than inflation!). I always recommend people open a TSFA TRADING account instead, that way they can put their money into the market and, even as a couch potato, get more than a 2% return on their savings.

    Great post!



  20. Kellen on January 12, 2011 at 5:07 am

    I use Mint for my budget – before that, I’d make a budget in excel, and then never open it again to update. Mint is the only thing that’s worked for me.

    I also like to “pay myself first” at T. Rowe Price, because they let you invest in their mutual funds at only $50/month. But you have to commit to invest $50/month until you’ve invested $1,000 in the fund, so it makes it harder to back out.



  21. krantcents on January 12, 2011 at 8:34 pm

    All good ideas! I find that i can live on the remainder of my earnings after the payroll deduction.



  22. young on January 12, 2011 at 11:23 pm

    @krantcents- well we all better be able to live on the remainder of our earnings, otherwise consumer debt will rise exponentially 🙂



  23. young on January 12, 2011 at 11:29 pm

    @Cowtown Realist- Love the picture of Calgary in your avatar 🙂 They should’ve called it TFSA Trading Account, instead of “savings account”. Maybe the government and the big banks were scheming on ways to confuse the public so that everyone will open an “emergency fund” with a TFSA and then get interest that barely keeps up with inflation.



  24. young on January 12, 2011 at 11:30 pm

    @Kellen- Coming from an accountant– I’m glad to hear I’m not the only one who relies on Mint for budgeting!



  25. Michal on January 13, 2011 at 8:50 am

    Great suggestions! One of my resolutions is to save all my change for the entire year. At the end of the year I will cash it in and see what it’s worth.



  26. young on January 13, 2011 at 11:37 pm

    @Michal- That’s a great idea 🙂 It would be heavy in your pockets though, in the meantime 🙂



  27. MoneyCone on January 15, 2011 at 3:53 pm

    Excellent tips! Simple and easy to follow!

    A related tip worked well with me – keep a check on impulse purchases. A dollar here and dollar there – stuff I really I don’t need and didn’t plan for was accounting for a good chunk of my balance.



  28. young on January 16, 2011 at 5:23 pm

    @MoneyCone- Thanks for your input- I’m have issues being an impulse spender. Especially if things are on sale! The one you suggested is a good one as well to follow.



  29. Barb Friedberg on January 17, 2011 at 6:11 pm

    These core suggestions are right on target. Unfortunately, some have a hard time with the budget, writing expenses down habits.



  30. young on January 17, 2011 at 7:57 pm

    @Barb Friedberg- Thanks Barb 🙂 writing expenses down and keeping a budget are both very difficult. I personally have issues with budgeting, but then I’ve been using Mint to keep my on track. I’ll have a post on my experience so far with Mint coming up on my blog.



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