Like most people, one (or several) of your New Year’s resolutions was most likely financially motivated. Maybe you planned to cut out certain long-standing debts, or planned to beef up your savings. Maybe you just wanted to make fewer unnecessary and unfulfilling splurge purchases overall, and start spending smarter. However, it’s easy to give up on your financial New Year’s resolutions, like sticking to a budget, if you feel like you’ve messed up badly and can’t get yourself back on track. Sometimes, we can also feel stuck because we believe that it would be easier to budget more effectively if we had a higher income. Whatever the reason for falling off the bandwagon over the last six months, now is the time to refocus our financial goals — it’s nearly June and the year is half over! It’s time to get your finances straightened out once and for all, and end the year more financially fit. There is still hope to make real progress and implement real steps to get yourself where you need to be.
The most important thing to remember is not to get too down on yourself for not sticking to your budget/finance goals as well as you hoped. You have to realize that if your goals weren’t met, it’s not because you can’t stick to them, but rather, the goals you set in the beginning might have been unrealistic ones. You know yourself better than anyone, and you can most likely identify where you made justifications/rationalizations to spend money excessively. The first step in recovering your financial goals for the second half of the year is to have those slip ups at the top of your mind when re-budgeting, so you can tackle the problem areas head on. Just glance at your credit card and bank statements for the month and add up the main areas of spending. You’ll either be shocked to see where your money went, or completely unsurprised.
Once you’ve had your Personal Reality Check, you’re ready to begin rebuilding mid-year financial goals. For me, it’s always important that I focus on fixing my inclination to be lazy and careless. My off-budget spending is partly attributed to spontaneous stops in drug stores, because I’m bored/displeased with say, my mascara, or I forgot my water canteen and picked up something bottled instead. It’s even become a habit to stop in on my way home from work to take a quick look inside, which leads me to buy. H&M is my other guilty pleasure because it always seems that I have a work event for which I “need” something proper to wear, or I’m bored/displeased with what I’m wearing and need an immediate fix. Once in a blue moon, I’ll stop into the store because I actually need something in a pinch, because I’ve spilt coffee on myself on the way in to work, and so it’s a last resort. Some of this spending is avoidable and can be handled with a little realistic preparation.
So how do you move forward when you feel like there’s no hope for attaining your financial goals? Set SMART goals. Make a budget, but not an aggressively *ideal* one that, if followed, would leave you with enough savings to put a down-payment on a house. Instead, set a budget that is realistic and leaves wiggle room for unforeseen circumstances. Budget for the person you are, and not for your vision of your perfect self.
I emphasize SMART not only because I feel like, “hey gurl be smart,” but because of the beneficial acronym associated with it. Maybe it’s one you’ve followed before, but if not, it’s definitely one that you should utilize regularly. Following the SMART acronym doesn’t have to pertain exclusively to your financial goals, and it can be focused on your personal and career goals as well. There are a couple of variations of this acronym in terms of what the individual letters stand for, but here is the one that I’ve found to be most useful:
S for Specific.
Don’t make casual commitments to spending less, create a real plan. Keep track, write things down, download finance apps, and take quantifiable steps. Make it a habit to know what’s in your bank account at all times, don’t just wait to open a tab on your computer, and proceed to wince. Set realistic changes for your spending habits. Plan “one Starbucks allowance per paycheck”, versus “less Starbucks.”
M for Measureable.
Make goals that let you really see the progress you’re making. If you plan to get your savings plan under control, make sure this money stays separate from your checking account. Whether you auto-deposit a certain amount out of each paycheck into savings or manually move it, put the money somewhere you can’t easily dip into, but where you can watch it grow!
A for Attainable.
Plan for your regular, required expenses first: rent, phone bill, electric bill, transportation for the month, prescriptions, pet care, loans, credit card minimums, food, and other expected monthly bills. After that, the expenses become a little more fluid and you have flexibility with how much you spend. Set up “budget buckets” for the other categories you’ll end up spending on, and make sure you don’t let them overspill into your required monthly expenses bucket. You want to make sure you’re being realistic in terms of what you’re able to save each month when all of your monthly bills are taken care of.
R for Realistic.
If you plan for the occasional new tube of mascara, a new pair of flats to replace your old and torn up ones, you won’t feel like you’ve ruined your budget for the month if you have a slip up. Set aside a small amount of money in your budget, say $50 a month, for incidentals. If you diligently track your little purchases, I guarantee the money you spend on unnecessary items here and there will decrease. Limit the little splurges to save up for more valuable splurges on items you actually need. If you do this, the worst case scenario is that you slip up one month and deplete the incidentals fund on purchases you didn’t need. However, because the money was accounted for in your budget, your nugget of savings is safe!
T for Timely.
Paying off debts and saving money are both directly affected by time, so do your best to be smart about how you tackle these. Take baby steps if you need to, but make sure you continuously chip away at debt, and slowly increase your savings. Always pay at least the minimum (try to pay more) on your credit card/loan bills, and pay special attention to the higher interest ones which should be paid off more quickly. Remember to pay consistently — missing a payment one month and doubling up next month doesn’t mean you’re being smart. An inconsistent payment pattern hurts your credit and will take a long time to rebuild. Savings should be approached similarly — the earlier you set aside money, the more it can accrue interest over time. “Make your money work for you”, as they say.
The most important thing to remember throughout this process is to be real with yourself. Set expectations that are attainable and push yourself to spend smarter. Don’t let mistakes set you back and keep you from reaching your year-end finance goals. You’ve got this!
Jaclyn Gallo is a writer and ad tech analyst in NYC. Follow her on Instagram.