Raise your hand if you know someone who has made their New Year’s resolutions about money. Perhaps that person is you. Now consider how many times in the past you have made New Year’s resolutions that didn’t stick. Have you ever wondered why that is?
The number one reason why most New Year’s resolutions about money fail is because they were unrealistic from the beginning and exactly the reason why a doctor should take care of their finances. This is actually good news, because all you have to do is set goals that are easy to turn into simple habits.
If the secret to making New Year’s resolutions that will both help you and be easy to stick to is your goal, then you have come to the right place.
Why Make Resolutions?
New Year’s resolutions about money can be a wonderful motivation tool, if approached the right way.
Rather than approach resolutions of any kind from a perspective of deprivation (say, defer the coffee, for example), it’s important to focus on what you can have that will affect your life in a positive way.
Resolutions are all about creating the resolve to make a positive change and create good personal finance habits. But, change, for most people, is a scary thing.
Change gets you out of your comfort zone.
Change embraces the unknown.
When things are going pretty well, why rock the boat? Why go for better when what you have is already pretty good?
Surely, this is no way to build your ideal life, is it?
Not really considering you probably have to eliminate debt to live a life of financial freedom.
Considering where you may be in your career, you likely have a large amount of debt that you’d like to get rid of. A big part of achieving your New Year’s resolutions about money requires you to confront it and create new, positive, forward-thinking financial habits that will help move you through the New Year with confidence, and hopefully with a little extra money in your pocket.
Developing New Financial Habits
Financial habits are easier to develop than you might think. The key, as mentioned above, is not to take on too much, too fast. Make new habits that are realistic, attainable, and even fun.
These twelve strategies are chosen because they are manageable, attainable, and will help you build positive change into your daily life and ultimately, help you build wealth at a desirable level for you.
We don’t recommend doing all of these at once. Too much change in a short period of time is a recipe for failure. Instead, consider implementing one per month, and rather than think of these as changes, think of them as healthy habits. If you can implement one new habit a month over the next year, just think of where you’ll be this time next year!
1. Perspective
Our first challenge to you is simply this: work on mindfully embracing new financial habits as a positive adjustment in your life. That’s it. Keep spending what you spend. Keep saving what you save. Don’t stress about money. Give yourself permission to be exactly who you are.
The only change we recommend making the first month is simply to reframe your thinking. That’s because it’s tough to think about finances in a positive light when you have a lot of debt hanging over your head.
You took on that debt for a reason and it’s probably one of the biggest financial challenges you’re battling.
Now that you have financed your education, you get to have the career of your dreams, right? You are using your skills to help others. You are building an ideal life for yourself. These are all wonderful things that deserve to be celebrated. Remember that there is always a way forward from where you are today.
2. Pay Yourself First (But What Does That Mean?)
Have you ever wondered what people mean when they say to pay yourself first? It’s not as though you have any extra money lying around, because if you did, you’d throw it at your mountain of student loan debt to help make that disappear.
Every month you bring in a certain amount of income. Every month, you have to send out a certain amount of money to cover fixed expenses. This is your cash flow. These are the numbers that don’t change month to month. Whatever is left over is your discretionary income. That is the money you can spend on clothes, fancy coffee drinks, travel, Netflix, or whatever you want.
You may think that clothes are not optional, but the amount you spend on them each month absolutely is.
The same with food; when you have a set amount of money to spend on groceries each month, that amount can be adjusted up or down based on your choices. You really do have some flexibility with you how you spend your money each month, probably more so than you may realize.
So here’s what you do to pay yourself first: each month, look at your discretionary income and choose a small, set amount to have deposited automatically into a savings or retirement account.
That’s it. That’s all you do. Then, you make your choices on discretionary income with what’s left. Start with ten dollars a paycheck, or maybe $25. I’m serious. Keep the amount that small. This way you won’t even miss it, yet you will develop the system to move that money steadily to a place where it’s harder to touch, like a savings account. Then sit back the rest of the year and watch it grow.
3. Give Yourself Permission to Splurge
You have probably read a lot of financial advice saying to stop spending money on fancy coffee drinks at Starbucks, because you can save a lot of money making coffee at home. As much as this may be true, sometimes, we really like the fancy coffee drinks at Starbucks. That is perfectly okay! It is your life to live and important for you to decide what things are important and what are not.
In the long run, it can be worth it to spend a bit more on quality goods and services than to always go the budget route. A well-made pair of shoes that will last you through the years is cheaper in the long run than the several pairs of cheaper shoes you will have to buy, because the soles wear out so fast. Good shoes have the added bonus of preventing extra trips to the chiropractor.
4. Set Auto Reminders to Pay Bills on Time
More and more bills are paperless, which is great for the environment, but can make it hard to keep track of them sometimes. You can log in to your online account for most bills and set them to autopay. You can also create a reminder alert on your electronic calendar to remind you when bills are due every month. Or, rock it old school and write in the due dates on a paper calendar. Whichever method you choose, make sure you to create a record of the bill and date that it’s due, in such a way that it’s impossible to ignore. After all, on time payment is one of the biggest factors that influence your credit score.
5. Do Some Financial Reading
Not everyone wants to become a financial planner, but reading up on a subject that so greatly impacts your life is a good idea. Knowledge truly is power, and learning what the pros have to say can help spark ideas of other new habits, for investment strategies, or for overall strategies to budget and save. There are a lot of great books out there and we don’t endorse any one in particular, so our advice is to check out whatever looks interesting at the library, or download some samples on your e-reader to choose a few to purchase. Then, set a goal of reading one new financial book per month through the end of the year. Write down any notes that jump out to you in particular, and see what great tips for new healthy habits you have collected.
6. Work on Reducing Your Screen Time
Physicians make their money work for them. Or, at least you should.
There was a time when staying home helped us not make impulse purchases. Then came the Internet. Now, in minutes it’s possible to purchase anything from books to food to even cars. Not only is staring at a screen bad for controlling impulse buying, it stops us from doing other things that may be more productive for our financial and overall health. Exercise, developing new hobbies, reading up on financial literacy, and the list goes on to things we could do with the time we waste through mindless Internet surfing.
There are apps that will monitor your screen time on your mobile device for you. You can see the breakdown daily or weekly about how you spend your time looking at that screen. Do you send a lot of emails? Are you spending most of your time surfing through social media? Whatever the amount of screen time you’re using, work on reducing it by a small amount at a time. Remember, big, sudden change is hard. Smaller habits repeated regularly over time become the new, healthier, happier you.
7. Forget Credit Card Hacks … For Now
It’s not hard to find a credit card that offers some sort of kickback these days, so besides making it hard for anybody to escape credit card debt, there are a ton of benefits. You can get anything from cash back to airline miles to discounts on clothes or gasoline. There is no end to articles talking about travel hacks and how to stack credit card offers against one another to maximize these rewards. The downside of this is that credit card rewards hacking quickly leads to financial insolvency. One of the best financial habits you can develop is to treat cold, hard cash as exactly what it is. Dollar for dollar, spend only what you have. Once you have a set of positive personal financial habits in place and want to look more closely at credit card rewards, there are ways to do that without destroying your credit or damaging your good habits. 
There are different schools of thought with this. It is true that increasing your credit limit (without increasing your spending) can help boost your credit score in the short term. The catch with this is that it increases your dependency on plastic, which can lead down a pathway to increased debt. Using credit in a more conventional fashion and sticking with cash wherever possible will help keep your monthly spending in check without your even thinking about it all that hard.
8. Learn to Say No to Yourself
Don’t worry, sometimes you can say yes (see tip number 3). But when you walk through Costco and see the cute set of flannel sheets with the snowmen on them and think that you could always use new sheets and after all they are such a great price – do yourself a favor and walk away. If you still want them a week later, then consider going back for them. Chances are, you won’t. The more you make saying no to wants that are not needs, the more this becomes a habit. This has the added bonus of helping you keep your home cluttered with things you don’t use and really don’t need.
9. Start an Investment Account
If you’re new to investing, we don’t recommend going rogue and throwing your money at the stock market without doing your research first. Give us a callor choose the financial planner of your choice to offer some advice on opening an IRA. Use your newfound financial knowledge from your monthly reading to choose a traditional or Roth IRA, and set up an automated amount to go into the account once a month or once every paycheck. This is a form of paying yourself first (see tip number 2), with the difference being that the money will go into a retirement or other investment account that is a little harder to touch, and that will have more risk than a savings account but more potential on the returns.
Investing through a mutual fund is a safe way to get your feet wet with the stock market, so to speak. You will be able to choose a fund made up of stocks in a variety of companies, and benefit from the potential of the stock market. Of course, there is greater risk when investing in stocks than when you keep your money in a savings account, but the potential rewards, over time, can be worth it.
10. Open a Dedicated Savings Account
This might be one of our favorite personal financial habits. Many banks allow you to open multiple savings accounts within your existing account. You can name them different things, such as “house fund” or “car fund” or “travel fund,” etc. Use the money you pay yourself in tip number 2 to go into the designated fund and watch it grow. You have already made saving a regular habit. This tip simply provides ideas for where to put the money so you systematically work toward your goals.
11. Give to Others
That’s right. Give some money away. Even with your mountain of student loan debt. Even with your mortgage, or dreams of funding a trip to Paris, or need to pay your rent. If you can find five extra dollars, choose a charity and make a donation (as an added bonus, charitable giving is often tax-deductible. Consult your tax adviser and save your receipts). We’re willing to bet you can spare five dollars a month to give to your favorite charity. Many charities make it easy to set up automated giving. Lest you think five dollars is not enough to make a difference, rest assured that 70% of charitable giving comes from individuals.
12. Cut Down on Restaurant Meals
Don’t worry, you can still eat out. The intention with this habit is to be mindful of what you spend on restaurant meals because eating out is so much more expensive than buying groceries and eating out. Sometimes, eating out is just the thing. But if you can eat out just one fewer time each month, you will likely have an extra $20-40 or more in your budget each month to feed one of your other brand new healthy financial habits.
Above All, Be Kind
The key with each of these habits really stems from tip number 1: Perspective. Keeping in mind how you spend and how your choices add up can make all the difference in making positive change in your financial life overall. You do not need to live a life of deprivation or sacrifice just because you have debt. You can still pay down your debt and eat at a restaurant once in a while. The key is to make some small, meaningful changes that are easy to implement, automate as much as you can, learn from and be kind to others, and above all, be kind to yourself.
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