The new year is all about resetting and getting your life back on track. After the year that was 2020, a lot of us are yearning for a restart. Being on track with your financials at the beginning of January will help set you up for success for the entire year. Here are a few money tips for the new year, new you.
I’ve mentioned the LBD—little budget diary—before and this is one of the most important steps to getting your financials in order. Take stock of all your monthly and annual expenses—such as magazine and newsletter subscriptions, Netflix account, groceries— and write them all down in your LBD. You’ll reference this all year—weekly is best—so you’ll want to start off on the right foot in January with an easy-to-reference LBD. Don’t make it hard. It’s an easy task that will help you get organized quickly.
Now that you’ve set up your LBD, you should be seeing what expenses seem superfluous. Over the course of a year, we tend to accumulate unnecessary things: splurge purchases, memberships, that $45 you spent on yet another sweat suit. Use your LBD to downsize your expenses. Many of our New Year’s resolutions are about shedding—time on social media, alcohol consumption, cookies eaten per week—and your expenses are no different. Use a buddy to help you and hold each other accountable. It’s like working out—much more fun with a friend.
The new year is all about goals and resolutions. The more specific, the better. And set schedules, timelines, and limits for yourself. If you want to get down to spending no more than $50 a week on groceries, set a reasonable deadline for yourself to get there. Or maybe you want to get a raise by the third quarter. Set specific goals for yourself throughout the year to help you get there. Maybe it means taking on one big project a month. Now, figure out what the project is and map out an outline. If you’re specific about what you want, you’ll be more likely to achieve your goal.The new year is all about goals and resolutions. The more specific, the better. And set schedules, timelines, and limits for yourself. Click To Tweet
Set aside at least one day every week to check your credit card. Again, sticking to a schedule is key here. As soon as you miss one day, you’ll slip and start making excuses the rest of the year. Checking your credit card statement every week will ensure that not only has there been no fraudulent activity, but it will serve as a reality check on your spending. It’s easy to forget how much those $5 cups of coffee can add up in a week. If you see it on your statement though, you’ll be more inclined to cut back if you have to.
Take an afternoon to write down some of your money mistakes in 2020. Did you decide not to return items you bought on Amazon AMZN -0.7% because it was a hassle? Now write down your money goals for 2021. It’s easier to make future goals if you know what went wrong in the past. Identifying your weaknesses will strengthen your financials moving forward. Then try implementing one of these goals each week. Maybe you want to spend less on takeout every week. Set a limit of, say, $20. As the year progresses and you stick to your goals, you can increase the amount to $25 a week and then $30, depending on your individual desires and needs.
Taking these small steps at the beginning of the year will go a long way towards resetting your financial situation. Make your goals and resolutions feel accessible. Don’t try to overreach, as many people do in January. If you do, then you might end up feeling disappointed. By starting small, you’ll be able to attain your goals easier. That will make it easier to then tackle the bigger goals.
A version of this article was originally published on Forbes.