I don’t know about you, but I look at the New Year with both excitement and apprehension. Apprehension because a year has come to an end and I will need to do a rundown of my successes and failures, and see what I have to show for myself in the past 365 days. Excitement because it is a new year, a clean slate, an opportunity to start fresh and to right what I may have got wrong in the past.
So every year, after reviewing my shortcomings, I inevitably come face to face with the dreaded list of New Year resolutions. As cumbersome as the whole task is, I recognize that it’s a necessary step to a better me.

This being a financial blog, I thought I would write on how to make financial resolutions, but more importantly, how to keep them.
So here we go:

1. Set your goals
What is important to you? What would you like to attack first?
Some people like to first see where they stand before making achievable goals, but I like to set an ambitious target first and then see how close I can get to it. I find that whether I actually hit my lofty target or not, I inevitably do better that the person that settled for an easily attainable one. Keep in mind your goals should be prioritized, quantifiable and have a deadline…otherwise they are merely dreams.

2. Do an inventory
What do you own? What do you owe?
An inventory is necessary to find out exactly where you stand. If you have never done one before, it could very well be the most time consuming portion of the whole exercise. The point is to write down every single penny you owe, who you owe to, the interest rate, the amortization period…etc. Same thing with your assets (value, interest accruing …etc)
The exercise allows you to have a snapshot of your current financial picture. A lot of people, having never done it before, are shocked by the results.

3. Track your expenses
Do you know where your money goes?
If not, how are you supposed to take control of it? Spend the next 2-4 weeks tracking every penny and finding out where you spend your money.

4. Make adjustments
Does your checkbook reflect your goals?
James W. Frick famously once said, “Don’t tell me where your priorities are.  Show me where you spend your money and I will tell you where they are”.
In order for our spending patterns to reflect our goals we need to tell our hard earned dollars where to go instead of wondering where they went; so adjust the budget until satisfactory.

5. Monitor and Review
Making progress? Staying on track?
This step is by far the most important. Everybody who is half serious about their New Year resolution makes it to step 4. It is step 5 that differentiates the people who go all the way from the ones who drop out in January.
Monitoring and reviewing consists of updating step 2, and making sure steps 3 & 4 still reflect and align with the goals. Ideally, this review should be done monthly, or at the very least quarterly.

There you have it folks – how to stick to your financial resolutions in the New Year!

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