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If financial resolutions are intentions — "I want to save more money this year" — then financial goals are a more specific aim — "I plan to cut discretionary spending by 20% each month."
Financial actions are the actual steps you take to make progress — "I will log in and cancel any subscription service I haven’t used in the past 30 days."
The goal is the expendable piece of that process, says Peter Bregman, executive coach and CEO of Bregman Partners, an executive coaching company.
As a coach, he helps leaders focus on what's important. He says people often overlook the intention of the change they want to make because it’s thought to be implicit. That can lead to tunnel vision and inflexibility on specific targets.
Skip goals, and go right from intention to action, he suggests.
Let’s say your financial intention (call it a resolution) for 2023 is to spend less money and pay off debt. Say it out loud to someone who’ll listen, says Bobbi Rebell, certified financial planner and author of “Launching Financial Grownups.” Now, with a sense of direction and accountability, you can make money moves, no goals required.
Money move 1: Look at the numbers
Grab a recent paycheck and a piece of paper, or get fancy with a free budget planner. Write your monthly, after-tax income at the top, then list our your financial obligations, says Rebell. Think rent, utilities, groceries, child care, transportation and any other bills and debt you have to pay no matter what.
Subtract those essential expenses from your monthly income. The money that remains is what you have for discretionary expenses and saving.
“It’s usually not as bad as you thought,” says Rebell. This exercise tends to uncover that a lot of expenses are discretionary, she says.
Use bank and credit card apps to tally up all the other scattered spending. From there, you can probably find a few things to cut. If you’re not sure where to start, take the budgetary ax to a streaming service. You may be surprised at the joy it brings.
Money move 2: Make it harder to buy things online
Debit cards, credit cards, cash apps and digital wallets make spending painless on the front end. The dull ache hits later though when the bills are due, especially if you carry a credit card balance.
It’s time to make shopping inconvenient. Delete retailer apps, unsubscribe from their mailing lists and remove stored credit cards from browsers and websites, says Rebell. It may sound trivial, but doing so adds friction to the purchase process. You’ll probably think twice about that new pair of shoes if you have to grab a credit card and hand jam the numbers into your phone at checkout.
“It’s basically a modern version of ‘freeze your credit card in the ice cube,’” she says. And yes, the literally frozen credit card is a thing.
Money move 3: Pick an approach to pay down debt
Take another look at your list of obligations and focus on the debt this time. Note the amount you owe and interest rate for any money borrowed. Think things like a car payment, student loans or a balance carried on a credit card. Now, choose a prioritization strategy.
Consider using a debt snowball or debt avalanche approach to pay off what you owe. With debt snowball, you focus on your smallest balances first, and hope to rack up quick wins as you close out loans.
With debt avalanche, you prioritize loans with higher interest rates to wipe out the most expensive debt first. Credit card bills are a good place to start with debt avalanche due to exorbitant APRs.
Both methods have merit. The important step is to pick a path and make the first move.
New year, new financial you
If goals are what get you from point A to B, then by all means, set them. But don’t let setting percentage targets hold you back from simple actions that help you gain control of your money.
The small steps really can make a big impact, says Rebell. “Do what you can, and don’t be too hard on yourself.”