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I’ve always been a fan of making New Year’s resolutions.
It’s time well spent. Setting goals each year is a step toward a new beginning, another chance to get something right. So what if you didn’t accomplish last year’s promises? Even a failed attempt can get you closer to your financial aspirations.
To help you with your resolution-making for 2024, I have four suggestions. It starts with recognizing the connection between your mental health and financial well-being, and then taking practical steps to realize your goals.
Resolution No. 1: Unpack your past
Are your spending and saving habits a reflection of your personal backstory?
Where do your money habits originate? Do you see yourself in any of these scenarios:
- You find it hard to spend because of childhood poverty? (I like to joke that my grandmother was so tight with her money that when she held a penny, Lincoln would scream).
- Or maybe you are the opposite of a penny pincher, and memories of going without as a child have you overspending now trying to erase those feelings?
- Did you live a silver-spoon lifestyle as a child getting everything you wanted, making it hard to deny yourself as an adult even though it’s crushing your ability to build wealth?
- Did you watch your parents fight about money and, as a result, take their issues into your marriage?
- Have you run up your credit cards trying to overcompensate for the challenges of being a single parent?
As regular readers of this column know, I was raised by my grandmother, Big Mama. Although she was a master at handling her money, she worried about making ends meet. She was raising five grandchildren on a nurse’s aide’s salary, and she had a husband with a drinking problem. The local bars got more of my grandfather’s paycheck than we did many paydays.
I inherited my grandmother’s financial acumen, but also her spirit of worry.
I’ve been working with a therapist to address my anxieties, especially since my husband retired last year. I fret about spending down what we’ve saved. In my head, I hear my grandmother say, “You just never know what’s going to happen.”
Do the work to figure out what’s been the roadblock to fixing your financial stress that has led to some bad decisions. If your health plan has a behavioral health benefit, use it.
If you don’t have coverage for therapy, look online for sliding-fee-scale behavioral health services. If you need assistance with finding mental health resources in your area, call 211 to speak with a live person who can help.
What’s your New Year’s resolution?: There’s a newsletter for that.
Resolution No. 2: Repair broken relationships.
As many folks learned during the pandemic, they needed to lean on friends and relatives for financial support.
But you can’t count on somebody being there for you if you haven’t talked to them in years. Maybe things can’t be resolved. Some relationships are too toxic to repair. However, with family counseling or individual therapy, you might be able to address grievances that created a wedge in your relationship.
I’m not suggesting you be nice to people just so they can bail you out, especially if you’re a poor money manager. This is about creating a network of goodwill that goes both ways.
Trying to break a phone habit in 2024? Skip the life hacks.
Here’s something else to consider: Who is going to take care of you in your old age? If you’re estranged from your adult children or other relatives, who will help you if you need long-term care? Even if you have the money to hire assistance, somebody should watch over things for you.
In 2021, about 38 million family caregivers in the U.S. provided an estimated 36 billion hours of care to an adult who needed long-term care, according to an AARP report released last year.
One of the things I hear often from caregivers is that they can’t get their adult siblings to help take care of a parent.
Resolution No. 3: Create a vision board
Once you’ve identified the core issues holding you back, develop a vision board on how you want to change things.
Get a poster board and find images online or from magazines around the house. Alternatively, you can create a digital version of your board.
Don’t underestimate the power of a vision board. It’s a physical reminder of your resolutions.
If you suffer from a sense of entitlement because you didn’t have much as a child, your board might have pictures of a life that depicts what it’s like to have emergency savings and a retirement account.
If your 2024 goal is to get out of debt, cut out phrases and pictures representing financial freedom. Look for quotes about being in debt.
Here’s one you can use: “If I had one piece of advice to give to young people … it would be just don’t get in debt.” It’s advice Warren Buffett gave to a teenager during a Berkshire Hathaway shareholder meeting 20 years ago.
I’d love to see your vision boards. Send photos to colorofmoney@washpost.com.
Resolution No. 4: Set specific and measurable goals
“I want to save more,” isn’t specific enough.
Instead, write down how much you want to save.
For instance, if you want to create or build up an emergency fund, set a goal for a realistic amount ($25 every paycheck, or just $5). Then, have the money automatically deducted from your pay and put it into a dedicated savings account.
It is not enough to envision the goal. You have to take action.
B.O.M. — The best of Michelle Singletary on personal finance
If you have a personal finance question for Washington Post columnist Michelle Singletary, please call 1-855-ASK-POST (1-855-275-7678).
My mortgage payoff story: My husband and I paid off the house in the spring of 2023 thanks to making extra payments and taking advantage of a mortgage recast. Even though it lowered my perfect 850 credit score and my column about it sparked some serious debate with readers, it was one of the best financial decisions I’ve made.
Credit card debt: If you’re in the habit of carrying credit card debt, stop. It’s just a myth that it will boost your credit score. For those looking to get out of credit card debt, see if a balance transfer is right for you.
Money moves for life: For a more sweeping overview of my timeless money advice, see Michelle Singletary’s Money Milestones. The interactive package offers guidance for every life stage, whether you’re just starting out in your career or planning for retirement.
Test yourself: Do you know where you stand financially? Take our quiz and read more personal finance advice.
Source link: https://www.washingtonpost.com/business/2024/01/05/resolutions-more-money-better-well-being/