Whoever started the New Year’s Resolution tradition must have known that most resolutions would be broken sooner rather than later. Realism, I suspect, is the secret to actually making one you’ll keep, especially if it deals with money.
If you feel frustrated by your financial situation and find yourself wishing you could do more, the likelihood is very high you can, if you start small. So here’s my suggestion: Resolve to be realistic, to save a little, share a little, spend a little.
People of surprisingly modest means have managed to put aside a significant chunk of cash to provide a comfortable retirement or fund a cause they were passionate about. How did they do that? They started small and increased their weekly or monthly savings over time as they learned not to spend every cent of their income. They knew, for example, that car insurance came due quarterly and Christmas rolled around once a year, and they had to plan ahead to take care of both without borrowing.
These people of modest means also understood the importance of compound interest. Granted, interest on savings has been virtually non-existent in the last few years, but the Federal Reserve’s recent move to increase the interest rate signals the beginning of a turn-around and a gradual return to higher interest rates.
Step 1 then is to set a goal and save a little, whether it is a dollar a week, or ten, or more. When you have comfortably reached that goal, increase it bit by bit until you get to where you really want to be.
Step 2 is to share a little. How do you do that? Same way you do Step 1. Start small, set a goal, and work toward it.
Step 3 is to spend a little. Chances are you already know how to do that, but do you know how much you are already spending on the non-essentials you could live without? Be honest with yourself: how much of your income goes to wants as opposed to needs? Don’t make yourself grumpy and hard to live with by denying yourself everything. Just be honest about which expenses are essential and which are optional. Then set yourself a goal to spend a little rather than a lot, and work toward it.
Finally, make this realistic resolution your mantra: Save a little, share a little, spend a little; save a little, share a little, spend a little; save a little, share a little, spend a little …..