By Tammy Trenta, MBA, CFP, CTC, CEXP
Founder and CEO – Family Financial
My 6-year-old son, Jack, was having a colorful evening – disruptive, you might say. And while ‘disruption’ is the buzzword du jour in the business world, it’s a buzzkill when you’re attempting to accomplish anything in your personal life. I was frustrated Jack wasn’t listening. When he put my husband in a headlock, I realized it was time to take a deep breath and switch gears.
“Why are you being so disruptive?” I asked.
“Because I want to eat ice cream and play and you are talking about boring stuff!” Jack said, frustrated we weren’t paying attention to him. I understood; we’ve all been there; growing impatient and wanting an immediate result. Then, it occurred to me that any human—big or small—needs a game plan to get results.
I said, “Let’s make a list of all the things you would like to do or have. Then, we’ll list the behaviors or steps that will help you earn rewards.”
When Jack looked at his list, he started to cry. “This is so much, Mommy! I can’t do it. It’s too hard to be good!”
Then it hit me: for a 6-year-old, the list was overwhelming. So, we broke it down into smaller steps, making modest, yet positive changes. We tackled the hardest ones first, giving him the confidence he needed to achieve those rewards and motivating him to replace disruptive behavior with productive behavior.
You can apply the same reasoning in setting your financial goals for the new year. Here are 8 resolutions designed to minimize overwhelm and disruption while keeping you on task.
1. Start to declutter your space. Notice I said, start—not Marie Kondo your entire house on January 1. Set a goal to tackle one room at a time. (A cluttered space = a cluttered mind). Sort items by “keep,” “toss,” or, “donate.” Get a receipt for the items you donate and document the fair market value before December 31—donations may be a tax deduction.
2. Weigh the value of your time. Remember, time is money. Consider bringing in hired guns (for example, laundry or meal prep services) to help you free up valuable time. Outsourcing one or two of your least favorite tasks could give you more time to spend on pursuits that will help you reach your goals.
3. Negotiate recurring expenses. You’d be surprised how often people ignore rising autopay amounts. Review recurring expenses like subscriptions and cell service. Contact your providers to negotiate better rates or consider switching to lower-cost alternatives.
4. Automate your savings and investments. If you have a cookie on the table, you might eat a few. Later, a few more. Before you know it, all the cookies are gone. It’s the same with your bank account, which is why I’m a huge fan of automating your savings (out of sight, out of mind). Set a goal to save 3-6 months of expenses as a cushion, making an automatic transfer each payday into a high-yield savings or money market account. Next, set up automatic transfers into an investment account to help build wealth over time. Be sure to revisit your choices at least annually.
5. Whittle down high-interest debt. Similarly, you can make a plan to systematically tackle high-interest debt, like credit cards and personal loans. Consider strategies like the debt snowball or debt avalanche method. And keep an eye out for new offers or products that could save you money—but always read the fine print.
6. Invest in yourself. I have a client who is a producer. During the pandemic, she became certified in maintaining COVID protocols on set, making her even more marketable. See where you could boost your skills through online courses, certifications, or even advanced degrees to increase your earning potential.
7. Create a separate budget for leisure activities. Torturous resolutions are almost impossible to maintain. If you quit spending money on fun things cold-turkey, you can fall back into overspending. I’m a firm believer in balance. Factor enjoyable things into your budget in advance.
8. Review financial progress annually. Compare your current trajectory to the year before and incorporate your goals for the year ahead. Establish or review your estate documents. Make sure your insurance coverage continues to meet your current needs, and that you aren’t overpaying for coverage you don’t need.
Whether you’re 6 or 106, change is never easy. But even small steps can help you minimize disruption, avoid derailment, and improve your personal and financial well-being in 2024.
And a little ice cream now and then certainly won’t hurt.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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