Make 2013 your best financial year ever with these month-by-month tips!
Making resolutions is a great way to improve your health, your finances, and to better yourself as a person. Yet it's odd how many people only make resolutions for the first of the year. The sad truth is that most lose motivation after just a few months, and all good intentions go out the window. Unfortunately, this not only means they don't reach their long-term financial goals, but they may also lose the confidence to try again in the future.
This year, resolve to make simple monthly resolutions. They're easier to achieve, and serve to break your larger resolutions down into doable goals with concrete timelines.
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January: Create or Update Your Budget
How do you make a budget? Start by determining two things: your monthly income and monthly expenses (including debt payments). Once you know these, you can group expenses into monthly budget categories of like items, such as food, gas, entertainment, and clothing.
Next, determine how much you've been spending in each category and where you can cut back. The goal is to ensure that your expenses are less than your income, while still having money remaining to pay off additional debt and save for the future. Finally, commit to stick to your budget through the coming months.
For those of you who already have a budget, January is for updating and reviewing it. Make sure the plan you have in place reflects your current income and expenses, and see if you can tweak it to further increase your savings or debt payments. Plus, reviewing your budget is a great way to get motivated to stay within your limits each month.
February: Read a Book
Read a book about personal finance. If you're interested in a particular area, such as investing, getting out of debt, or saving on groceries, this is the month to educate yourself.
If you seek motivation to stick to your money goals and budget, try one of these: The Millionaire Next Door by Thomas Stanley and William Danko, 40 Days to Work You Love by Dan Miller, The Total Money Makeover by Dave Ramsey, or Who Moved My Cheese? by Spencer Johnson. Take notes, and share what you learn with a family member or friend. In fact, if you can teach someone else the information, you're more likely to retain it.
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March: Plan to Eradicate Debt
Now is the time to be aggressive about paying down your debt. Consider how you can reduce your expenses by using coupons for groceries, cancelling cable, or switching to reusable products. Also, think of ways to boost your bank account by earning extra cash. Once you figure out how much extra money you can make or save, allocate that to paying off your debt.
Keep in mind that this resolution may take a few years to complete, and make sure you have an emergency fund cushion before you aggressively tackle your debt. After all, if you need emergency money fast, it defeats the purpose to put it on a credit card.
April: Be Smart With Your Refund
If you're receiving a tax refund, don't just blow it on the latest, greatest gadget. Pay off high interest debt, save your money, or invest it in home improvement projects that will increase the value of your home. Last year I put my refund towards paying off debt, and two years ago I used my refund to install wood flooring.
But even if you don't receive a refund, you're not off the hook this month. Whether you had taxes due or received a refund, determine the proper number of withholding allowances for your household. If you received a large refund, increasing your allowances will put that money back in your paychecks throughout the year. And if you owed additional tax, decreasing your withholding allowances will ensure that more is taken out of your paycheck so that you owe less at tax time.
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May: Check Your Emergency Fund
In any economy, it's important to have a back-up plan in case of the unexpected, such as a job loss or accident. Starting and building up an emergency fund is a great way to put your mind at ease, especially if you have debt to pay off or are living paycheck-to-paycheck.
Even if you already have an emergency fund, take the month of May to evaluate it. Ideally, you want 6 to 12 months worth of expenses at your disposal if you need it. For example, if both you and your spouse work, you may feel comfortable with only six months. However, if you are the sole breadwinner and your spouse stays at home or has lost a job, you may want to increase that amount to 12 months of expenses and possibly more, depending on your situation and ability to save.
June: Find a Way to Give
These goals are about bettering your financial situation, but beyond that, they're about improving yourself as a person. One way to do this is to give your time, talents, or wealth. You can assist others who need a hand, and you may even become more appreciative of the riches in your own life.
Even if times are tough, you can still give by showing that you care: visit a nursing home, serve at a soup kitchen, or create artwork for hospitals. This is also a great month to discover ways to kickstart a lifestyle of charitable giving†for your children. Because kids are out of school, they can easily participate in charitable activities.
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July: Revisit Your Budget
After you have made it halfway through the year, it's time to reevaluate your budget. Are you on track, or do you need to make adjustments to how you are spending? Do the amounts you have budgeted make sense, or do you have too much allocated to one category, but not enough to another? Alter your budget if necessary, and if you are having problems staying on track, consider using the envelope system to correct the problem (i.e. budgeting cash in paper envelopes marked for specific spending categories).
August: Learn a New Skill
Learn a new skill that will save you money. For example, you could†take a course in tax prep, or learn how to do oil changes. Another great skill to learn is how to cut hair. My husband has been cutting his own hair every 6 weeks for the past 15 years, and he's easily saved more than $1,000 from just that one skill! In fact, the savings compound since he now cuts our son's hair.
If you are not quite ready to learn how to cut hair, however, consider taking a few cooking courses. My family now prefers my cooking to going out most nights, which saves us a lot of money and adds variety, especially when we use family meal planning ideas.
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September: Start Reusing
There may be many items that you buy regularly that could be easily replaced by a reusable item. For example, plastic bags can be replaced by reusable sandwich or snack bags, and cloth towels can substitute for paper. If you have an infant or toddler at home, start using cloth diapers instead of disposables to save thousands of dollars over the course of their diaper-wearing years.
Not only is reusing great for the environment, it's also great for your wallet. This month, try to replace at least one commonly used disposable item with a reusable item, and if it goes well, make another replacement each month going forward.
October: Plan Early for the Holidays
One of the best ways to save money on holiday food, decorations, and gifts is to plan early. If you'll be hosting a party, create your menu ahead of time and buy non-perishable items as they go on sale over the next couple of months. Also, create your gift-giving list and brainstorm ideas well in advance to take advantage of sales and buy before the last-minute rush when items tend to be over-priced.
Related: How to Use Gift Cards for Maximum Savings
November: Evaluate Your Year
As the year approaches its end, take time to reflect. Were you able to stick to your budget? Did you complete each month's resolution? How would you rate your success? What could you do better, and in what areas did you really excel?
Consider this your own personal year-end performance review. Be honest with yourself, take pride in your accomplishments, and recognize where you fell short. Use what you've learned as motivation to do even better with your resolutions next year.
December: Plan for the New Year
It's time to start all over. You can repeat these same resolutions, or alter the plan based off of what you learned or to better suit your current situation.
Although things like job loss and the rising cost of food may be out of your control, how you choose to spend and manage your money is not. Take your financial destiny in your own hands by following these monthly resolutions or customizing your own annual plan. Good luck to you in this new year!
This post was written by Casey Slide, a stay-at-home mom of one living in the Atlanta area. In addition to keeping her family's finances in order, Casey blogs about budgeting, couponing, and smart shopping on Money Crashers.
Tell us, what are your financial resolutions for 2013?