Financial actions speak louder than resolutions

If financial decisions are intentions—”I want to save more money this year”—then financial goals are a more specific goal: “I plan to reduce discretionary spending by 20% every month.”

Financial Actions are the actual steps you take to make progress: “I’ll sign in and cancel any subscription service I haven’t used in the last 30 days.”

According to Peter Bregman, executive coach and CEO of Bregman Partners, an executive coaching company, purpose is an expendable element of this process.

As a coach, he helps leaders focus on what matters. He says that people often overlook the intent of the change they want to make because it is considered implicit. This can lead to tunnel vision and inflexibility towards specific targets.

Skip goals and go straight from intent to action, he suggests.

Let’s say your financial intention (let’s call it a decision) for 2023 is to spend less money and pay off your debt. Say it out loud to someone who will listen, says Bobby Rebell, a certified financial planner and author of Launching Financial Grownups. Now, with a sense of direction and responsibility, you can make money without requiring any goals.

Money move 1: look at the numbers

Grab a recent paycheck and a piece of paper, or get creative with a free budget planner. Write your monthly after-tax income at the top, and then list our financial obligations,” says Rebell. Think about rent, utilities, groceries, childcare, transportation, and any other bills and debts you have to pay no matter what.

Subtract these basic expenses from your monthly income. The money that remains is what you have for discretionary spending and savings.

“It’s usually not as bad as you thought,” Rebell says. This exercise tends to show that many spending is discretionary, she says.

Use banking and credit card apps to calculate all other miscellaneous expenses. From there, you can probably find a few things to cut out. If you don’t know where to start, check out a streaming service. You may be surprised at the joy this brings.

Cash 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. A dull ache comes later when bills need to be paid, especially if you have a credit card balance.

It’s time to make shopping uncomfortable. Remove retailers’ apps, unsubscribe from their mailing lists, and remove saved credit cards from browsers and websites, says Rebell. It may seem trivial, but it complicates the buying process. You will probably think twice about a new pair of shoes if you have to take out a credit card and enter numbers into the phone at the checkout.

“Basically, it’s the modern version of ‘freeze a credit card in an ice cube,'” she says. And yes, literally a frozen credit card is a thing.

Cash move 3: choose an approach to debt repayment

Take another look at your list of obligations and this time focus on debt. Pay attention to the amount you owe and the interest rate on any money you borrow. Think about things like car payments, student loans, or credit card balances. Now choose a prioritization strategy.

Consider using a debt snowball or debt avalanche to pay off what you owe. With a debt snowball, you focus on your smallest balances first and hope to make a quick buck by closing loans.

In a debt avalanche, you prioritize loans with higher interest rates to pay off your most expensive debt first. Credit card accounts are a good place to start a debt avalanche due to exorbitant APRs.

Both methods have merit. The important step is to choose a path and take the first step.

New year, new financial you

If goals are what gets you from point A to point B, then be sure to set them. But don’t let setting interest rates keep you from doing the simple things that will help you gain control of your money.

“Small steps can really make a big impact,” says Rebell. “Do what you can and don’t be too hard on yourself.”

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