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:
- Write 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?