Finances can be a huge source of stress for many people. Managing life within financial means can be tricky and detrimental to happiness if those things aren’t balanced. Not only that, but the holiday season tends to exacerbate the problem. Holiday parties and gift giving can cause even more stress to an already stretched budget. For this reason, it might be time to think about your finances when considering your new year resolution. In fact, perhaps it’s time to make “Financial New Year R esolutions.” Think about it.
Getting your finances in check has a way of trickling down to the rest of your life. Feeling better about your financial standing can alleviate stress and make you happier for the new year. Creating a budget, saving money, having “no spend days,” making frugal decisions, and giving back are all financial changes you can begin making to start your new year off right.
Create a Solid Budget
One way to encompass many different financial goals is just to create a really solid budget and stick to it. First, track your income. Go by the average amount you made in the past six months or so if your monthly salary isn’t steady. Next, calculate your fixed expenses. Track down all of your debt, track your monthly bills, and track your spending. If you’re overwhelmed by student debt, look into ways to make your student loans more manageable. Start with the 50/30/20 budget as a starting point and tweak it if you need to. With this plan, you’ll allocate 50 percent of your income to needs, 30 percent to your wants, and 20 percent to debt and savings.
If your bills and spending are more than your monthly income, reevaluate your spending and cut some expenses. Make long-term expense choices wisely. Do your homework before signing a lease, research cancellation fees for long-term contracts, and be sure you’re prioritizing debt management before adding more bills to your plate. Making a debt payment plan and fine-tuning your budget can do huge things for your overall happiness and alleviate stress. With a budget in mind, you won’t have to worry about whether you can afford something, and you won’t be blindsided by your fixed expenses. Instead, you’ll have a feeling of financial calm every month to at least know what to expect and how to remedy financial holes in your budget.
Saving money is so important. For one, retirement savings can never start early enough. Having a new year resolution to start saving for retirement now will pay off in the long run. Another option is to create an emergency savings account equal to about 2 to 3 months living expenses in case of job loss or another financial emergency. Paying into savings like its a bill every month will yield great results over the year as long as you stick to that resolution. The stress associated with an emergency situation can be detrimental, and having a financial nest egg can be such a relief in case an emergency happens. Another option is to save for something specific. Whether it’s a new car, a trip, or a down payment, having a solid goal with an exact amount in mind can be a little easier to visualize and maintain. No matter what you end up saving for, seeing that number go up can do wonders to help your stress.
Commit to “No Spend Days”
You don’t have to spend money to do something fun and be happy. Committing to “no spend days” is great for you in two ways. One, it helps reduce spending and helps your budget. Two, it helps to change financial habits and mindset. Sometimes it’s impossible to have a day without spending. Things come up that require funds all the time. However, if you can, plan days that don’t involve spending any money. Spend time outside, have a lazy day inside, and rework your mindset so that you don’t associate money spent with stress release and happiness. Make coffee at home, make home cooked meals, discover some old hobbies, and learn to love the days you don’t need to spend money in order to enjoy yourself.
Make Frugal Choices
Your financial new year resolution doesn’t have to be all about making big changes pertaining to retirement and budgeting. Your financial resolution may be something a little more subtle. You don’t have to make giant changes to your budget, just smaller frugal changes to your existing habits. As a resolution, you can work to buy coffee only once a week. This small change can save hundreds of dollars a year. Eating out is another giant hole in many budgets. Instead of eating out, meal plan. Eat at home before going out somewhere so you aren’t’ tempted, or get cheaper menu items. Making frugal choices really depends on your own financial holes you find in your budget. Cutting back on coffee won’t do much if you only buy coffee once every few weeks. Be honest about your own spending problems and find frugal alternatives for them.
Start Giving Back
Giving back can be a great way to use your finances to reduce stress and increase your happiness in the next year. By making a plan for giving back to those around you, you can focus
on the causes that mean a lot to you. If you have the extra money, you can do something good with it like donating to your local animal shelter, contributing to an organization that hits home for you, or to fundraisers your family and friends may be a part of. Giving back is good for your overall health and happiness because it makes you feel good, encourages feelings of togetherness within your community, and reduces stress. Many charitable donations are tax deductible and have ways of coming back to you financially. There aren’t many downsides to giving, so incorporating it into your financial resolutions next year can help in many ways.
Money can be a cause of stress, but it doesn’t have to be. By budgeting, saving, spending less, and giving back, you can turn your financial habits into something that makes you feel secure and at ease and not so stressed and unhappy. With the new year coming up, think about what financial resolution will increase your overall happiness and reduce your stress. Whether it’s starting a savings account, buying less coffee, or contributing to a charity each year, you can make your resolution something to help your financial happiness.
About the Author
Chelsy Ranard is a writer from Montana who graduated with her journalism degree in 2012 from the University of Montana. She is passionate about addiction recovery advocacy, loves talk radio, and prefers her coffee cold. Follow her on Twitter!