There is ample evidence to show that most New Year’s resolutions don’t make it past the beginning of February (one of the latest pieces of research, from Gold’s Gym, named February 7 the Fitness Cliff — that’s the day when most people seem to fall off the wagon, according to their membership data). That means that by now, there’s a good chance you’re snoozing through your alarm, spending the money you were supposed to be saving, or nagging your husband (again).
So I’d like to make an argument for the February resolution: The pressure’s off, by this point. You’re not struggling to ease back into work after a week or two of holiday vacation. Your daily routine is back to normal. And you’ve already started scaling out of the holiday spending binge, which means you’re already on your way to being back on track and you don’t have to drop the credit cards cold turkey.
Yes, now is the time to grab 2014 and make it a financial turning point in your life. Here’s how to do it:
Recover from the holidays. If you haven’t already paid off your debt hangover, that’s your first focus. I like to see this wiped out by the end of February, if not before (and of course ideally, you wouldn’t go into debt for holiday gifting at all). Take some time to scale back your spending by focusing on the little things you likely won’t notice — change your latte order to a regular coffee and add your own milk, pack your lunch not once a week but three or four times, skip the manicure or your hair cut this month. As you do these things, immediately transfer the money you’ve saved into a savings account, or use it to make even a small payment on your credit card. So say tomorrow, you decide to brown bag it when you’d normally buy a $6 sandwich. As soon as lunch is over, get that $6 out of your checking account before you spend it on something else.
Visit your savings account balances. I like to do this monthly, and I think that once you start, you will, too. It is what makes something that generally isn’t any fun — saving — a lot of fun. Sometimes just seeing how much the little bits of money you’ve squirreled away have amounted to can give you the boost you need to put away even more. So make some time to sit down and take a tour of the accounts you have set up for retirement, college, health savings, emergencies, and even other short-term goals.
Edge up your contributions. The last point should give you the motivation you need to do this. I’ve found that in most cases, you won’t miss 1 or 2% of your salary. You may notice a slight difference at first, but you’ll quickly adjust. So my suggestion for eventually maxing out your retirement account or increasing your savings for other goals is to bump up your contributions by 2% every year. If you’re lucky, you can align this with a raise, but even if you’re not, you’ll still be able to spare the extra income if you put it out of your mind (and your checking account) before you have a chance to touch it. Automatic transfers are the best way to make this happen.
Pay attention to what’s coming down the pike. The key to not being blindsided by events, like a summer vacation or even next year’s holiday spending, is to plan for them in advance by putting aside a little bit of money every single month. (Do this for a vacation, and it can end up feeling like you’re on an all-expenses-paid trip — because you don’t have to scrape together the money right before, or pay off the credit cards after, it feels almost free and will make the trip all the more relaxing.) Then you plan your spending based on the money you’ve been able to put aside. If you manage to save $1,000 for your summer vacation, you’re going to Florida, not Hawaii.