How to Stick to Financial Resolutions?

Just like countless New Year’s resolutions, people also make countless financial resolutions to build wealth every year. However, they often tend to go down the same way as the other hefty resolutions, as people give up soon after. It is understandable that sticking to your financial resolutions is incredibly tough. After all, even smaller acts like splurging or not following a set budget could impact your financial future.
 

In this article, we will take an introspective approach to spending and discuss a few questions you can ask yourself. These questions are fundamental for every investor who wants to save and build wealth over time while leveraging the financial market.

• Savings are important, but investing is key to growing wealth and beating inflation over time.
  

• Keeping a close eye on your expenditures helps you stay accountable and within your budget.

• Spending should always align with your earning capacity to avoid debt and maintain financial control.

One of the major fundamentals in the financial market is to not just save, but also invest. While it is true that savings will help you stay liquidated on rainy days, investing is what will truly help you beat inflation and build wealth. No matter where you are in your career, it is essential to invest. The financial market offers several asset avenues for you to select from and invest in. These include mutual funds, stocks, and bonds, among others. You can easily choose options that suit your personal preferences, financial goals, and level of comfortable risk.

Shopping never fails to give a sudden, albeit short, hit of dopamine. It can even be addictive. With the advent of plastic money, spending has become easier than ever. Gone are the days when you were limited by your monthly salary, as credit cards let you zoom past it. Plus, you have sufficient time to wait for your next salary and pay the bill. This system, geared towards promoting customer spending, is heavily contributing to the rapid rise of credit card debt globally. Now, more than ever, it is important to be mindful of your purchases and to learn their effective use. For instance, you should only take a credit card in the first place if you are confident in your ability to not overspend and then worry about the settlement later.

While the above questions may seem enquiring, this is perhaps the simplest. As easy as it sounds, do you track your spending? The answer for most people is ‘no’. Tracking spending is a tedious task that is often a result of denial, as monitoring your spending will be like holding up a mirror and taking the fun out of shopping in the short term. If you relate to this, it is important to ask yourself the following:

• Where do you spend your money?

• Which purchases are crucial to you?

• Which purchases are unnecessary and can be cut down?
   

These questions will help you move on to the next step, which is making a budget.

While monitoring your budget is good, it is only the first step in this direction. The next step is to plan and make a budget. This does not need to be overly complicated and would take only 5 minutes a day. Noting down your everyday expenses is a good place to start as it can allow you to track your expenses, reflect, and budget accordingly.

When you make a budget, it would also be apparent to you if you are spending as per your income. While this is a seemingly fundamental aspect of the economy, many people tend to overshoot their budgets as the economic systems encourage spending. Thus, you should always only spend as much as you can earn.

Controlling the urge to splurge is essential to building wealth and long-term financial stability. By investing wisely, being mindful of credit card spending, tracking expenses, and maintaining a realistic budget, you can create a solid foundation for wealth accumulation. These small, consistent actions will lead to better financial health and discipline, ensuring that short-term indulgences do not undermine your future goals.