Well, it's been almost a month since you made those New Year's resolutions. And if you're like most Americans, finding a new job and getting your finances in order were among your top goals.
Unfortunately, if you're like most Americans, you're also beginning to give up on those noble goals.
Typically, four out of five people fail to carry through with their New Year's resolutions. The reasons given were that we have difficulty tracking their progress and get discouraged when we don't see immediate results. As January heads into February, your initial enthusiasm begins to fade, while the benefits of keeping your resolutions seem so far down the road that it makes you wonder if it's worth the trouble.
First off, the answer is yes, it is worth the trouble. Think about what your life would be like twelve months from now if you got your finances in order and found a better job. It's a nice picture. But make no mistake, it won't be easy. (If it was, everyone would do it.)
Luckily, for those looking for a new job this year, the market is likely to improve in 2004. Some job-market watchers predict that the growing U.S. economy will begin adding 100,000 to 150,000 new jobs a month, up from the current level of 80,000 a month.
Regardless of whether you're looking for a new job or attempting to pay off some credit card debt, if you want to be successful in reaching your financial goals, you need a plan. Here are the steps to making your resolution a reality:
Make a written plan
The saying "plan your work and work your plan" certainly applies to your finances. Set your goals, keep them realistic and then reduce them to a written summary of what you want to do, why you want to do it and when and how you will get it done. When you've finished, show your plan to friends and family.
Writing out a plan crystallizes in your mind what you want to accomplish, while publicly acknowledging your goals makes it extremely difficult from a psychological standpoint to back out.
As to the best way to write a plan, the key is to Keep It Short & Specific (KISS). Here is an example:
- My goal: Pay down $2,500 of credit card debt.
- Why I will do it: Getting rid of these monthly payments will save me a lot of money in interest and allow me to save for an emergency.
- When I will do it: In one year, requiring monthly payments of $220.
- How I will do it: Bring my lunch to work three days a week ($60 per month), make my own coffee in the morning ($60 per month), eat out one less time a month ($50 per month) and cancel my cable ($50 per month).
Set out to first accomplish the goals that will provide the most financial benefit and free up resources that can be used to accomplish your other goals. For example, use some income to pay down credit-card debt and when the payments are gone use the income towards building up an emergency fund or saving for a down payment on a house or a car.
Carve your goals into bite-size pieces
Break your goals down into process steps, with each step that can be accomplished quickly.
For example, if you want to start saving more -- or anything -- for retirement, the first step is to check and see if your employer has a savings plan. If they don't, you look into how to open an Individual Retirement Account.
The next step could be buying or, even better, checking out a few books from the library on investing. A few good ones for beginning investors are The Coffeehouse Investor by Bill Schultheis and The Successful Investor Today: 14 Simple Truths You Must Know When You Invest by Larry Swedroe.
Next, you might consider setting up an appointment with a fee-only financial planner to discuss the best investment portfolio for you.
Finally, you either enroll in your company's retirement plan or establish an IRA with a mutual fund company that offers no-load, inexpensive funds such as Vanguard or T. Rowe Price.
Achieving your goals is never easy, but the rewards can change your life. Although most of your friends are giving up, you can succeed by remember why you want to change, making a plan and tackling the problem piece by piece.