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3 Tips to Help You Stick with Your Financial New Year's Resolutions

CJ Miller of Sensible Money explains easy ways to save more money, spend less money, and pay down debt in 2022.

By CJ Miller, CFP

Financial New Year’s resolutions are one of the most popular kinds to make. Of course, like any resolution, the hard part is following through. Here are some tips to succeed with three of the most common financial resolutions.

Saving More Money

Saving more money can be elusive. Although it feels good to think about, months can go by without much improvement. One tactic that can help you save more is to set a specific goal. Instead of generically saying “I want to save more,” set a goal to fill up an emergency fund or max out a retirement account. Once you have concrete goals, it becomes much easier to initiate the action required to save more. You can even make these savings automatic by increasing your 401(k) account contributions or setting up automatic transfers to the appropriate account.

Spend Less Money

The first step to spending less money is to start tracking your spending. There is a variety of ways to do this, and several apps like Mint and You Need a Budget available to help. The bottom line is that you can’t start spending less until you know what you’re currently spending on.

Once your spending picture is clear, focus on reducing major lifestyle expenses first. Many people like to try to cut out buying a $5 coffee, but that doesn’t move the needle much in most budgets. Focus on reducing “big rock” items, like rent and auto costs, instead. Finding a roommate or waiting to upgrade your car can go a long way to spending less money.

Pay Down Debt

Paying down debt is another popular New Year’s resolution. It is not always a wise one though. There are certain kinds of debts that make sense NOT to pay down faster, such as a fixed-rate mortgage. The best way to evaluate whether paying off debt is the best approach for you is to develop a holistic, comprehensive retirement plan.

If you decide that paying off debt is a priority, the first step is to ensure you stop taking on additional debt. To do this, you’ll want to avoid “sneaky” debt. Most retailers offer low or no interest loans on purchases. This is known as “buy now, pay later.” Although this may seem appealing, it can often lead to purchasing more than you can afford. This will result in the opposite of paying down debt.

Another tactic is to look at debt consolidation for high interest rate loans. One option for credit card debt, for instance, is to apply for a card with a 0% APR balance transfer offer. This will allow you to “move” a portion of current credit card debt to the new card with 0% interest for a certain period. 

About the author: CJ Miller, CFP®, RMA®

CJ Miller, CFP®, RMA® is a financial planner with Sensible Money in Scottsdale, Arizona. Miller is also a member of the Financial Planning Association (FPA) of Greater Phoenix Board of Directors and is involved in the Active 20-30 Club.

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