Four thousand years ago, the ancient Babylonians became the first society to make New Year’s resolutions, and they were largely related to money. According to historical records, the Babylonians would crown a new monarch and, “they also made promises to the gods to pay their debts and return any objects they had borrowed.” Alas, it is comforting to know that we humans have been trying to commit to being and doing better for millennia!
Fast forward to 2018, and money is still top-of-mind when the New Year arrives. It’s a great time to reflect on the year that has passed and identify ways to improve. TD Ameritrade recently surveyed 1,000 investors* to see what their main financial regrets were in 2017, and they might sound familiar…
- Not saving for retirement
- Spending beyond their means
- Going into credit card debt
- Not being invested in the stock market
The same people surveyed also outlined their top financial priorities for 2018. Many of these might also be familiar, either as past or future resolutions:
- 46 percent said they want to boost their retirement savings
- 35 percent plan to reduce unnecessary spending
- And 25 percent want this to be the year they stick to a budget
In order to make progress toward your financial goals in 2018, it’s important to think about and write those goals down. People who have outlined their goals and created a financial plan are three times as likely to be confident they will reach their retirement goals than those without a plan.
Here are six steps to create a plan for 2018.
1. Know your pitfalls. Whether your list of regrets is the same or different than those Americans who were surveyed, write down your top financial regrets from 2017. These could be bad financial habits you want to break, or a goal you didn’t quite meet. It’s important to be mindful about things that aren’t working or didn’t go well, so that you can adapt and improve.
2. Create a short-term goal (one that’s achievable this year). For example, maybe it’s not feasible to get entirely out of debt this year, but you can break down big goals into chunks in order to make progress year after year. Sticking to a smaller resolution and achieving that goal can be a great motivator for the years ahead.
3. Identify long-term goals (one that you’ll work toward in 2018, but not necessarily achieve). What do you need to do in 2018 to make sure you are on track to reach your long-term financial goals like retirement? Keep the big picture in mind throughout 2018—it’s what will keep you motivated with your financial resolutions.
4. Make a list of tools you need. There are so many books, mobile apps and online resources to help budget, save and invest. Ask around, read reviews and pick out a couple tools that will help you save time and be more efficient with your money management in 2018.
5. Choose your team. A partner or spouse may be the obvious choice for a financial accountability partner, but think about other people who can help you and hold you accountable as well. Your list might include parents, friends, trusted coworkers, a life coach, mentor or professional financial advisor.
6. Make time. A recent eMarketer report revealed that Americans, on average, spend 51 minutes a day scrolling social networks and nearly four hours in front of the TV. What if just one or two hours each week were reallocated to personal finance? It would make budgeting, saving and investing much easier and less stressful for many people. If scrolling through Facebook isn’t really making you happy or improving your life, commit to reallocating some of that attention to your finances—a small change that could have a positive impact on your wealth.
7. Room for setbacks. Make room for potential setbacks in your budget and in your financial planning. The point is to make progress and to have the means to get back on track when potential setbacks occur. Establish a rainy day fund and give yourself permission to dip into it when needed.
Be mindful about areas for improvement this year, but don’t dwell in the past. Use this time of change and new beginnings to reflect on areas of your life that could use some attention – in this case, money is a great place to start.
This article was originally published on The Huffington Post.