4 New Year’s Goals Worth a Spot on Your List

Now that the holidays are behind you and the extra pounds have settled into place from all those wonderful treats, what changes would you like to make for the new year? We all plan to lose weight, save more money, or quit any number of vices. Every year, more than 25% of people make some vague “spend less and save more” type of resolution related to their personal finances. And we work really hard at our resolutions . . . for about three weeks.

This year, it’s time to get serious about your money. Make your personal finances a top priority for this new year with these four budget-friendly goals:

1. Get on a Budget

This has to be the first step, especially if you aren’t operating on a monthly budget right now or if the holidays sabotaged your budgeting efforts. Before every month begins, write down—on paper and on purpose—a specific assignment for each of your incoming dollars. Think of your dollars as financial soldiers—each one needs a mission to accomplish.

Your money can be used for saving, operating your household, paying debt, eating out and purchases. It’s your money, so you get to tell it what to do. Writing a budget, honestly, might not the most fun you will ever have. As a matter of fact, it takes quite a bit of work and effort. And it will take you three to six months before you really get it right. But, budgeting is worth it because managed money feels like getting a raise.

2. Evaluate 2016 Spending

Take a look back at where all the money you earned went in 2016. Celebrate debt you paid off and money you were able to save. It’s time to take some financial steps for the better this year if you end up thinking, I made that much? Where did all that money go?

Take a good look at what you spent on groceries, entertainment and dining out. For most people, these are three easy places to start trimming your budget. The beginning of a new year is also a great time to evaluate your insurance coverage and premiums to determine if there might be any savings there.

3. Attack Debt

Could this be the year you end up debt free? If you really want to get rid of your debt, it’s time to get into gazelle-intense attack mode using the debt snowball. Here’s how it works:

  • Start by listing all of your debts—yes, it’s time to face the music—smallest to largest. Don’t worry about the interest rates.
  • Pay the minimum monthly payment on all of the debts except the smallest one.
  • Focus any extra money in your monthly budget on that smallest debt. Consider selling some things to get more money to throw at it.
  • When that balance is paid off, roll that payment into the next largest debt’s payment and get that debt snowball moving.
  • Keep rolling those growing payments to the next debt in line until everything is paid off.

4. Beef Up the Emergency Fund

Remember, life will happen. The question is not if an emergency will happen; it’s when. Make sure you have a financial shock-absorber between you and life—at least $1,000 in a separate account to start. Once you’re debt-free, increase your emergency fund to somewhere between three to six months of living expenses. So if your emergency fund is looking a little thin, set a savings goal and a plan to reach it so you can end the year with a comfortable cushion.

The start of a new year is always a great time to refocus your efforts and energy. Here’s a personal challenge for this new year: Spend as much time (or more) on personal finance goals this year as you do on your other goals. Not only will you drop some pounds, you will also drop some debt—and you may even drop some serious cash into savings!