Every New Year, people around the world celebrate new beginnings and the chance at a fresh start. Unfortunately, the state of your finances isn’t wiped away with the new calendar year and you’ll still face the same challenges when the clock strikes 12. For many hopeful Americans, New Year financial resolutions are a chance at shifting their mindset for a brighter future.
The only challenge? Sticking to the lofty goals that seem impossible to reach. This year, create financial resolutions you’ll actually keep with a daily January challenge and accompanying worksheets. That way, building credit and paying loans don’t seem as inaccessible with these simple daily tasks and a few rewards in the mix.
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Americans constantly struggle to pay bills, repay debt, and manage loans, which can take a toll on mental health. A Money and Mental Health survey reported that 93 percent of people experiencing an episode related to mental health spend more on average. That spending can, in turn, lead to unsecured debt which is typically accrued after major life stressors.
Luckily, completing even small financial goals can improve mental health. According to research at Vanderbilt, accomplishing tasks releases dopamine in the prefrontal cortex — an area of the brain known to impact motivation and reward. The benefits of completing these small money goals have the potential to inspire long-term financial independence when done properly.
This year, keep your New Year financial resolutions by setting manageable goals. Print the January 2021 calendar below. Each week you’ll have a financial theme with a worksheet and one simple daily task to complete. For each task you accomplish, print the stickers on adhesive paper or tape them directly on the calendar. At the end of the month, review your biggest wins and what you can work on for the remainder of the calendar year.
Spending mindfully helps you to be cognizant about purchases and lessens buyer’s remorse. Instead of shaming spending altogether, this lifestyle-based money-management technique aims to increase awareness of your purchases to make better financial decisions in the long run.
Prior to each purchase you make this week, log your answers to each question in the mindful spending worksheet to better understand how each purchase supports your goals. At the end of the week, circle each purchase that you could have avoided or saved money on.
Saving for an emergency fund or another large purchase after the responsibility of paying fixed expenses can seem unattainable for many Americans struggling to pay their bills. This week, start small with smart financial choices. While you may not stay within your budget the very first month, creating one is the first step to reaching that goal.
Creating a budget keeps you accountable for your spending and puts your debt-to-income ratio into perspective. Using this worksheet, record your expected monthly income and budget your fixed expenses. At the end of the month, record your actual expenses, then calculate the difference. Repeat the process as needed.
Once you’re in the debt cycle, improving your credit score is likely the last thing on your mind. According to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households, more than one in 10 Americans won’t even attempt to apply for credit because they expect a negative outcome. A good credit score is the access point for larger loans and even credit cards with more favorable terms. Complete these daily tasks to unveil where you are in your credit journey.
There is no quick fix when it comes to credit, that’s why in this week’s challenge, you should focus on understanding your score and the factors that impact it instead of attempting to fix it over the course of seven days. Use the worksheet to understand your current debt circumstances, how you’re currently managing it, and the most important aspects of your credit and debt management plan.
You started this month with short-term goals like avoiding overdraft fees with mindful spending and unsubscribing from marketing emails. For the last week of this challenge, your New Year financial resolutions focus on confronting your long-term financial goals with an actionable plan that you can accomplish for the rest of the year and years to come.
Living within your means is key to achieving long-term financial success. Plan your long-term financial objectives using SMART (Specific, Measurable, Achievable, Realistic, and Time-bound) goals in the templated worksheet below.
No matter where you are with finances, there’s always room for improvement. By starting your year off with achievable daily goals, you’ll be on your way to a better financial you. Whether you complete one week of goals or all four, you’ll find yourself with more mindful spending habits, more money in the bank, and loan payments that will help you build a better credit score.
Sources: Federal Reserve | Sage Journals | Consumer Finance Bureau 1, 2