Today guest poster Leanne Seel encourages us to make and keep our financial resolutions.
How long do your resolutions last? Or have you given up on the idea of resolutions all together? Change is hard – even when we want it with all our hearts. I used to make resolutions each year. Some lasted longer than others. I’ve noticed over the years that the ones that have stuck follow two basic principles.
So here are the two basic principles to help you keep financial resolutions:
1) Positive goals
I resolve to work towards something rather than trying to move away from or stop doing something else. For example, I succeed a lot more often when I resolve to buy only what is on my list when I’m in the grocery store instead of resolving to stop buying chocolate-covered almonds. As soon as I think about chocolate-covered almonds, I want some.
2) Small, manageable steps
Instead of trying to jump all the way to where I want to be all at once, I break it down into manageable chunks. When I quit drinking Diet Coke about 12 years ago, I first had to switch to the caffeine-free version. Once I broke the caffeine addiction, then I focused on the habit. It worked. I went from carrying a case of pop in my trunk to drinking only water.
When it comes to money, the same principles can apply. We can resolve to take small, manageable steps toward the positive goals that we have set out. I would like to challenge you to take positive action in each area of your finances in 2014.
Exception: If you are in dire straits and you are about to lose your house or have your power shut off, you don’t have the luxury of making small changes over a period of time. You need help now, so please find a financial counsellor who can work with you on an individual basis.
Assuming you’re not in need of drastic help, here are four areas of financial management, starting with the most important area:
Area 1 – Giving
As Christians, giving should be at the top of our financial priorities. Our culture flips the priority order around and puts giving at the bottom. This is completely wrong. God should come first. In practical terms in our family, we tithe at least 10% of our gross income to our local church. Our donations to other organizations and almsgiving are over and above this amount. Some think this is excessive. Opponents to tithing often say that Malachi 3:8-11 is Old Testament law and therefore we are not obligated to follow it. That may or may not be true. Personally, I would rather err on the side of giving God too much (as if that’s even possible!). Everything that we have belongs to Him (Psalm 24:1), so really 10% is a bargain.
Where are you at right now? If you know that God would have you give more, start stepping out in faith and obedience to Him. Take your usual monthly amount and add a bit to it, or even double it if you’re starting low. Keep increasing until you reach the level God wants you to be at.
You may look at your numbers right now and think it’s impossible, but there’s a strange phenomenon that I’ve noticed with tithing. The math doesn’t usually look like it will work, but then somehow it does. When I was a university student, the savings I had built up in high school were running really low by my third year of a four year program. I projected what I needed and what I anticipated making at my part-time job and it wasn’t enough. In faith, I still tithed on any money that came in, and I stayed the course being responsible with my spending. Then, not so coincidentally, I was able to make more money by taking extra hours at my job. I found a cheaper place to park my car. The things I needed at the grocery store were on sale. God provided. The same pattern has repeated itself in different ways many times since.
Area 2 – Debt repayment
The next priority is getting out of debt. If you have consumer debt (debt for something other than a house, car, or education), then you need to get rid of it. It’s not easy, but it’s necessary. I wrote a 4-part series called Take this debt and SACK it on my blog last fall. The four steps to this process are taking Stock of where you are (S), Allocating your repayments strategically (A), Cutting your expenses (C), and Keeping track (K) of what you’re doing. If you have consumer debt, I would encourage you to read these 4 posts over the next 4 weeks (one post per week) and take the related actions. Find the freedom that comes from being debt free!
Area 3 – Saving
Retirement, emergencies, future education… the list for saving goes on. Are you putting away enough for all these things? Try adding just a little to what you’re currently saving. Once you adjust your spending downwards to what you have left over, save a bit more. Keep going until you’ve reached your monthly savings goal.
Area 4 – Spending
In this area, we need to spend better. When we go into a store, I tell my kids that the store’s goal is to get us to spend as much as possible. Our goal is to get what we need while spending the least amount we can. It doesn’t mean that we have to be complete penny pinchers with everything, but it does mean that we have to sacrifice in some areas in order to be able to spend more in others.
When I’m looking for areas to reduce our family budget, I start with recurring items because the savings will repeat month after month. I spend the energy once to figure out the least expensive option, and I keep saving money over and over again (think insurance, phone, cable, internet, etc). By reducing what we spend on an on-going basis, we’re able to meet our savings goal and then use the rest for fun stuff like a family vacation fund.
In 2014, I challenge you to examine an area of your budget where you can spend better. Once you see the increase in your bank account, it will be worth the effort! You may even decide to tackle more than one this year.
What are your financial resolutions for 2014? What strategies have you found to be the most helpful in actually keeping the resolutions that you make?
Leanne Seel is a CPA, CA who lives in Ontario, Canada. After spending many years as a partner in a CA firm, she now writes educational material while homeschooling her two children. She is the author of The Emerging Entrepreneur: Launching your part-time business in Canada and French Sing & Learn. Her favorite place is the beach. You can find more of Leanne’s money and tax tips at www.sensiblemoneysolutions.com.