With 2014 underway, New Year’s resolutions are a dime a dozen.
Study after study concludes that annual resolutions are rarely kept. In the words of Mary Poppins, resolutions are like a pie crust promise — easily made, easily broken.
Resolutions aim too high. While getting out of debt, spending less, and saving more are admirable goals, they do little to change our day-to-day actions.
Instead of lofty resolutions, we need to change our core habits.
Here are five habits to develop in 2014 to significantly improve your finances.
Track One Expense
A lot of people hate to budget. Tracking every dime spent is tedious and often unhelpful.
Just because one knows where they spent their money doesn’t mean their budget actually influences their spending decisions.
Instead, develop the habit of tracking just one spending category. Pick an expense that you believe may be a problem area for your budget, and keep track of spending in just that one category.
Once you get spending in that category under control, start tracking the next expense that’s causing you to blow through your budget.
Audit Your Monthly Bills
We’re taught to check the batteries in our smoke detectors twice a year when the time changes.
Likewise, make it a habit to examine your monthly bills. You may find that you can get rid of services you don’t really need (e.g., 500 channels of cable you never watch) or at least reduce the cost.
I call this the One-N-Done method of saving because you make just one change that saves money month after month.
One of the hardest habits to develop is saving and investing money.
Fortunately, we can easily automate this process, which makes developing the habit of saving much easier.
You can automate the building of an emergency fund by setting up monthly transfers from a checking account to a savings account that pays a decent interest rate.
Even better, sign up for your company’s 401k or an IRA and have money set aside each month automatically.
Build learning into your daily routine. That may mean spending 15 minutes every day reading a book about finance or your career or a side business.
It could mean following blogs relevant to finances or your chosen career.
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Successful finances and building wealth are about more than spending less than you earn and saving for a rainy day.
You need to learn how money works, and have a good grasp of the fundamentals if you want to turn your money into long-term wealth.
Track Your Progress
You can’t improve what you don’t measure. The measuring stick for finances is a personal balance sheet, which lists what an individual owns and owes.
Commit to updating your balance sheet every month. It takes just a few minutes, and this habit will cause you to refocus every month on your financial progress.
To make it even easier, there are free online tools you can use to track your investments and debts automatically.
In the words of Aristotle, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.” The same is true for financial freedom.
“5 Financial Habits That Will Change Your Life” was provided by Credit.com.