Many of us start off the New Year saying, “This is the year I’m going to get my finances in order,” but far too often we fall into the same old traps. People who successfully stick to financial plans have three things in place: goals, an understanding of the influences that knock them off course and a financial plan.
When I speak to people about their goals, I generally hear things like “I want to save more money,” or “I want to spend less.” These ambitions are vague and rarely accompanied by a plan. Take a moment, imagine what your ideal life looks like and keep in mind the following:
• How am I spending my time?
• What am I spending my money on?
• Where am I?
• Who am I with?
• How am I making a difference?
While in this mindset, figure out what it will cost in money and time and come up with one goal in each of the following categories.
1. Personal Goals: Perhaps you want to start a business.
2. Financial Goals: Is this the year you want to boost your emergency or retirement savings?
3. Giving Back Goals: Are there causes or organizations you want to support? What are ways you can support them? Maybe it’s with time instead of money.
What Knocks Us Off Course…
The reasons we spend money on things that are not in line with our goals are complicated. We must recognize these factors and come up with a plan to stand up to them. So many different factors and pressures play a role in our attitudes about money and choices. Think about the messages you tell yourself about: saving, spending, debt and investing. How would those messages change if you were achieving your goals? What changes would you make to your financial behavior?
A Financial Plan…
Financial plans are about empowerment, not deprivation. Identify spending you can reallocate towards your goals. Ask a friend or loved one to help you stay on track.
List your income and all of your expenses and create a budget. Help yourself create an environment that allows you to stick to your budget. For example, figure out what you can afford to spend each month and put that amount on a prepaid card. With prepaid cards, you can only spend what’s loaded on the card so there’s no risk of overspending. My personal favorite is the American Express Prepaid Card because there are no monthly or activation fees.
If you spend a little time thinking and planning, you can make year 2012 different and you can set yourself up for achieving your financial goals.
Stacey Tisdale is a personal finance expert and author of The True Cost of Happiness: The Real Story Behind Managing Your Money. Tisdale is the Financial Correspondent for PBS national newsmagazine show, “Need to Know,” and is also a blogger on the Huffington Post – Black Voices platform. She’s currently working with American Express on the Prepaid Card.
