As humans, we are wired for growth. But (and this is a big “but”), we are also prone to laziness, apathy, impulse, stress, and guilt. And it’s about now that most of us have let go of our January resolutions, especially financial resolutions.
You see, on the path to achieving financial goals, there are a thousand distractions, shortcuts, opinions, excuses, and pitfalls along the way. Maybe you made a commitment to pay off debt, set a budget, get a second job, or eat less at restaurants. But then you had a flat tire. And the HVAC system bit the dust. And inflation exploded. And the stock market went into free fall. Maybe you’ve gone back to your old financial habits or feel like this just isn’t your year to hit those financial goals.
But here’s the thing: personal finance is a marathon, not a sprint. And if you keep an eye on the prize, you can still achieve your goals – just keep moving. I hereby declare a second new year, my friend. You can still do it!
How to take back control of your money by 2023
Refocus your money mentality
Want to know what makes one person successful with money and another quits? It’s simple: it’s their money mentality.
Henry Ford once said, “Whether you think you can do something or not, you’re right. How you feel about money, yourself, and the world shapes the course of your life. Every day, you have the power to make decisions that will help you achieve your financial goals or set you back. It’s yours.
Budgeting every month, living on less than you earn, and avoiding debt won’t matter if you don’t believe it’s even possible for you. So many people hit the snooze button on their finances as if they’re going to wake up one day and be able to retire with dignity (and money). Perhaps they hope to take their finances more seriously later in life. Or maybe they think that winning with money is only possible for the “rich”.
If this is you, you need to change your mindset. Your parents can’t make you care. Your spouse cannot endear you. And as much as I wish I could, I can’t make you care. It’s up to you to change your mindset.
Evaluate your financial habits
Creating better financial habits starts with taking an honest look in your financial mirror, i.e. your bank account. Tracking your spending will help you figure out which areas you need to shave in order to create a margin with your money. Enter: the budget. This will help you tell your money where to go instead of wondering where it went!
I use an app called EveryDollar that makes it easy to create a monthly zero-based budget. This doesn’t mean you have zero dollars, it means your income minus your expenses equals zero. You give every dollar a job—you don’t want your dollars to go out of work!
Once you’ve listed your expenses, find the areas where you’re overspending. Maybe you’re switching from the fancy gym to a cheaper fitness app you can use at home. Maybe you cut a few subscriptions on top of that and take a side hustle. Then you can get creative and go a month free and ask a friend to change your Amazon password so you can remove the temptation to do some digital window shopping. Making these small sacrificial tweaks will help you gain headroom and momentum, which will fuel your progress.
Now, part of staying motivated when trying to create a healthy habit is remembering the outcome of your goal. Either way, visualize it and keep it front and center when you’re tempted to give up.
Commit to a plan
If one of your goals is to pay off debt, it’s easy to feel discouraged and unmotivated when you don’t have a plan to do so. This is why I love and maintain the debt snowball method. Here’s how it works:
Step 1: List your debts from smallest to largest, regardless of the interest rate.
2nd step: Make minimum payments on all but the smallest debts.
Step 3: Pay as much as you can on your smallest debt.
Step 4: Repeat until each debt is paid in full.
Now, before you start discussing interest rates, hear me out: when you stick to the plan (without worrying about interest rates), you’re going to jump for joy when you pay off that smallest amount of debt very quickly. This excitement is what will motivate you to keep going, to that debt-free finish line. Millions of people have gotten out of debt using this method, including me. And you can do it too.
You’re past half a year now, folks. It’s time to refocus your mindset, carefully review your habits, and stick to the plan. Whatever financial goals you set for yourself in 2022, and wherever you are with them, don’t let go now. It’s the last straight line. Don’t give up on your financial goals (but don’t be afraid to abandon the cart)!