Increasing retirement savings, reducing debt or putting away more for your child’s education may be on your list of new year resolutions, but to make them more than wishful thinking you need a plan.
To help make your financial new year’s resolution stick, portfolio manager Amy Dietz-Graham of Bank of Montreal says to make it automatic.
Whether it is increasing the amount you save or paying off that last stubborn balance on a line of credit, she suggests setting up regular payments. “Then it is not something that you have to think about,” she said. “It takes a lot of the pressure off of you having to constantly remind yourself to keep on top of a resolution. Just make it automatic.”
MORE AUTOMATIC PROCESSES: The New Habits You Need to Succeed »
Dietz-Graham’s new year resolution is to start saving to buy a cottage with her husband. It will take more than 2016 to reach their ultimate goal, but she has set a target for their savings for the year.
She said it’s important to set specific goals so that progress can be measured. Vague resolutions to save more or reduce debt aren’t as good as a plan to save an additional $1,000 by June 30 or eliminate a line of credit balance by Sept. 30.
“If you set a target and you can see it and you can visualize, you really get a sense of where you’re at, how far away you are from it, what you need to do and then you can break it into bite-sized pieces,” she said.
MORE TARGETS: How to Never Miss a Deadline Again »
Dietz-Graham also recommends setting a calendar to track progress on a regular basis throughout the year. “That actually will motivate you,” she said.
An annual survey by Sun Life Financial suggested debt is continuing to weigh on Canadians. The survey found 54 per cent of those asked said they were not financially better off than they were a year ago and 66 per cent said their debt level was the same or worse than a year ago.
And while two-thirds of Canadians were optimistic about 2016, only 13 per cent said paying down debt is among their top three resolutions and just four per cent ranked savings as a top resolution.
MORE SAVINGS: 4 Tips to Get Better at Saving for Your RRSP »
Financial adviser Patrick Fitzgerald of Sun Life Financial said the start of the year is a natural time to dust off financial plans and take a look at goals as the upcoming RRSP deadline and tax season approaches. “It seems to be a natural fit with the start of a new year,” he said.
Fitzgerald said whether it is saving more or paying down debt more quickly, it starts with looking at how you’re spending your money and finding areas you can trim.
“What type of money is coming into the household and what kind of money is going out?” he said. “Where are those usual expenses and what I would coin as survival expenses—so the necessities—and where are the extras? Where’s the fat?”
Fitzgerald’s own financial resolution is saving for his kids’ education. “It’s a natural for us with a family of three,” he said.
MORE ON PERSONAL FINANCE:
- Are You Really Financially Literate? Test Yourself »
- Why Canadian Business Owners May Need to Rewrite Their Wills »
- The Wealthy Entrepreneur »
- 3 Things You Should Do Before Filing Your Taxes »
- Do You Earn What You Should? »
What are your financial resolutions for the new year? Let us know by commenting below.