How to Stop Making the Same Money Mistakes This Year

By
When we come to the end of a calendar or fiscal year, or start gathering the paperwork we need to file tax returns, we may think back on our financial decisions of the past 12 months.  Or we may have this internal heart-to-heart as each bank statement or credit card bill arrives in the mail.


For many of us, these thoughts bring regret.  Maybe we're unhappy about overspending, missed savings opportunities, or major expenditures that now seem unwise.  Maybe our level of debt causes anxiety or shame.  In spite of our intentions and resolutions, we may wonder how we let ourselves make these terrible choices yet again.


tax time



Don't follow this trend.


If you're in this situation, you're not alone.  The average American family added 14% more credit card debt in 2022, and even more in 2023.  Auto and personal loan balances are up, and Experian reports that mortgage debt has seen record growth.  Millions of Americans spend more than they earn every month, the exact opposite of financial health.


When the Joneses spend more than they earn and save less than they need, keeping up with them is a really bad idea.


This realization is the first, essential step toward making positive changes in your financial life.  Keep going with the following effective strategies.





10 tips to improve your financial situation this year


1.  Admit it.

Acknowledge where you went wrong, but don't condemn.  Name calling and endless regret won't help, but noticing your pitfalls will.  Are you an impulsive shopper?  Have you failed to make savings a priority?  Is your record-keeping sloppy, resulting in late fees and overdrafts?  Understanding your weaknesses is the best way to overcome them.


2.  Be specific.

Vague resolutions like "spend less" usually fail.  Whether you decide to pay off a certain amount of debt, save a particular sum, or cut spending in one category by a definite percentage, set a specific, achievable money goal and you'll be more likely to reach it.


3.  Stick to a budget.

Does the idea of a budget seem restrictive, boring, and old fashioned?  Believe it or not, "budget" is not a dirty word, and a budget isn't an outdated idea, but a useful tool for today.


The process of making a budget helps us focus on our needs, but it also lets us find a way to afford our desires.  A budget gives us control over where our money goes.  There are many apps that make the process easy, or you can try my simple 8-step plan.


4.  Build emergency savings.

With an emergency fund, you'll have one less source of stress when your car suddenly needs a new alternator, your refrigerator unexpectedly dies, or your child needs a trip to the emergency room.  If you have debt, an emergency fund can help you avoid borrowing more.


Of course, an emergency fund won't happen overnight.  But you can start today to implement one or more savings strategies.


5.  Make saving a priority.

Watching your savings grow won't just increase your peace of mind, it will help curb your desire to shop for things you don't need.  Use these strategies:

  • Save a portion of every paycheck, even if it's small.
  • Decide to save a percentage of every windfall.
  • Pay yourself first by setting up an automatic transfer into your savings account every payday.
  • Pay with cash instead of a card, and put any coins in a jar.  I save over $40 a month this way.

6.  Plan to tackle debt.

If debt is holding your future hostage, don't despair.  It may seem impossible, but you can get free.  Here's my plan to destroy debt.


7.  Curb the impulse.

Impulse buys will derail any budget, so implement a waiting period.  Notice what you see and want to buy and tell yourself that if you still want it in three days you can come back and buy it guilt-free.  Do you even remember it three days later?  Or does your sudden "need" fade away?


8.  Consider adding income.

Decide if you want to enhance your savings or debt repayment goals by increasing income.  You could take on a side hustle, do freelance work, or even sell items you no longer need.


Remember that more work hours mean less free time.  Will you be less likely to cook and do other home chores, or more tempted to indulge in extra purchases?  If so, cutting non-essential costs may be a better option to meet your needs.  Only you can decide if more work will actually help you or not.


9.  Veto lifestyle inflation.

This is the tendency we all have to increase our spending when income rises.  When we do this, it remains impossible to get out of debt, save, invest, or consider retirement.  It forces us to keep working just to pay the bills.  Don't justify lifestyle inflation with "I work hard, so I deserve this."  What you deserve is less stress, less debt, and more financial security.


10.  Practice gratitude.

Gratitude will shift your focus from what you lack and want to buy to the many blessings you already have.  It's necessary for contentment, and a surefire way to get your spending under control.







One more thing


Very few people can claim perfection in the area of finances.  Perhaps our relationship to money is the true test of our character.  That said, it's important to forgive yourself for past mistakes.  Financial health is a journey of small, consistent steps, and it's never too late to begin with new determination and purpose.  Here's to a year of better choices!





SIMPLE MONEY book
Physical clutter can be obvious:  that unused treadmill, those stacked up boxes, or the pile of knickknacks, mail, and remotes on the coffee table.  But financial clutter, such as debt, overspending, and a fuzzy understanding of what you owe and where your money goes can be much less apparent.


Minimalism doesn't mean lack and deprivation.  Minimalism is a tool that can help us find happiness by steering us in the direction of what we truly desire.  As we let go of financial clutter, we have more resources to accomplish the things we really care about.



  • discover your money beliefs and how they influence your financial decisions
  • buy less and demolish debt
  • make a budget that lets you focus on your needs and find a way to afford your desires
  • feel empowered, not poor, as you control your spending
  • increase enjoyment and satisfaction without spending money
  • and more!


* This blog is reader-supported.  If you buy through my links, I may earn a small commission.


Comments

Post a Comment

Popular posts from this blog

45 Useful Tips to Help You Responsibly Declutter Unwanted Items

By
Image
Do you ever drive down the highway or out on a country road and see someone's old couch or mattress?  When driving through the orchards and croplands around my town, I sometimes see stuff like this in an irrigation ditch.  I can't believe people do this, and leave it for the farmers to clean up or pay for disposal. Tossing stuff you no longer need or want into a dumpster isn't minimalism – it's the equivalent of littering , just like the people who throw things out on the side of the road.  It may seem simple, but it's not responsible or good for the environment. Unfortunately, some of what we remove from our homes is garbage , and there's no place for it but the landfill.  But when getting rid of clutter means mindlessly tossing it into the garbage, it becomes too easy to buy more and fill our homes up all over again.   By becoming more accountable, we change our minds about purchasing.  I believe that when you thoughtfully declutter, you'll become very sen
Read more

12 Tips to Try When You're Frustrated with Decluttering

By
Image
I won't sugar-coat it – decluttering is a hard job.  The more you're stressed and challenged by your home – the more you need the benefits that come with decluttering – the bigger the job probably is.  The advantages are real, but so is the frustration.  At times, you may feel tired, sad, or overwhelmed.  Letting go of stuff requires constant decision-making, and sometimes you'll need a break. And you deserve one!  You're not just decluttering, you're in the process of changing your mindset and your habits , and that's hard for anyone.  So when you feel like the job is too big, or that you should have everything under control, remember that no one has it all under control.  We're human, which means that we often have to learn the hard way.  But the victory will be even sweeter because you made it through the highs, the lows, and everything in between. When you feel like giving up, on decluttering or anything else, be gentle with yourself, and say goodbye to
Read more

Why You Should Make "Less is More" Your Mantra for Life

By
Image
Maybe you've heard the saying popularized by architect Mies van der Rohe in 1947:  "Less is more." It's an oxymoron – a phrase that seems to contradict itself.  Others include "old news," "open secret," "unbiased opinion," and "awfully good."  Or the lament, "Parting is such sweet sorrow." What does "less is more" mean?  It's wonderfully open-ended.  Answers to that are as varied as the people who reply.  Consider: Less anxiety, more peace. Less debt, more savings. Less busywork, more substance. Less clutter, more space. Less comparison, more contentment. Less sugar, more vegetables. Voluntary simplicity Back in the 1990s, a fair number of Americans realized that the continual quest for more and better was stressing them out and keeping them from creating lives of purpose.  After the consumerist binge of the yuppie-era 80s, some started wondering if the big house, flashy car, exotic vacation, and Rolex we
Read more

Why You Should Try Wearing the Same Clothes Every Day

By
Image
Wearing the same clothes every day would get boring, wouldn't it? A long time ago, I had a job that required a uniform, and I have to say it did make life easier .  I had three copies of my work outfit, and there was never a question about what to wear.  I never worried whether my clothes were stylish or "right," because everyone else wore the same thing. The same argument has been used in public and private schools in favor of student uniforms.  Rather than constant worries about fashion and comparisons and dress codes, a uniform makes everything simple.  It's one less thing to think about in the complex life of a student. Many people argue that clothes make a statement about who you are.  "I express myself through my clothes" is a comment I've often heard, usually from women.  The idea of a uniform scares them, because how will they make themselves noticeable or unique ? I think we might be imagining some sort of Handmaid's Tale society, where we
Read more

One Question That's Keeping Your Home Cluttered

By
Image
Have you ever tried decluttering with a child?  You walk into their room, or the family room, or wherever the toys are piled highest, and it's so overwhelming you just feel like dumping the lot. It may be a natural feeling, but you know it would be cruel, and that's not what you want.  You just want some clarity.  You want some peace.  You want some space to walk around without stabbing your foot on a toy! So you pick up something you know your child hasn't actually played with in quite a while.  It's a thing that gets tossed around when she's looking for the thing she really wants.  It's pretty ratty-looking too (unless it's made of plastic, in which case it will look practically brand-new when it's been in the landfill for a century).  Then you ask her the question . It's the question that's going to keep your entire house cluttered. Reasons we keep our stuff We're really good at accumulating, but not so good at getting rid of things.  Tha
Read more