The new year is approaching. But if you’re like many people, you’re dealing with one or more financial regrets from 2023.
You know how to budget, you have the best intentions to reach your savings goals, but an honest look at the numbers shows some serious neglect.
Read: 10 Expenses Most Likely to Drain Your Checking Account Every Month
Learn: 3 Things You Should Do When Your Savings Reach $50,000
You are not alone. Data from 2023 shows that while total personal savings in the US is just under $800 billion, half of Americans have less than $500 saved.
To recover from last year’s financial setbacks, you’ll want to call on your emotional strength and practical planning skills. Here’s how to get back on your financial footing with a solid and realistic plan for the coming year.
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Shake Off the Funk and Build Your Money Mindset
Understanding Financial Regret
If you’ve been beating yourself up about how you handled your savings account last year, the first step is to identify and understand your regrets.
Enrich Fiscal Fitness founder Helen Huang, an eight-year veteran of personal finance coaching to high-performing women, puts it this way: “Consider your regrets as feedback to yourself. , and don’t think about it. Self-criticism is unnecessary, and probably, inaccurate. Even responsible people can be trapped under obligations that are too heavy to bear.”
Reflect and Frame Your Lost Savings Goals
Take a moment to examine the reasons for the failure of your goals. Life is unpredictable, and financial setbacks are part of the journey. Did an unexpected expense arise? Is your budget realistic? Appreciate that failures provide the important learnings you need to do better next time.
For example, your budget may be so tight that you end up spending out of pocket. Don’t forget to make ways to take care of yourself and enjoy life.
Before Planning, an Increase in Confidence
Before you sit down to refresh your savings plan, Huang advises taking some time to remember all the good things you’ve done this year. What friendships have you built or maintained? What skills did you learn? What work do you do that you are proud of?
Remember, says Huang, “this particular result from last year is not the full picture of what you can do.”
More: How to Survive on $500 a Month: A Frugal Guide to Living
Your Step-by-Step Return Plan for Savings
Refresh Your ‘Big Why’
First, reconnect with the deeper reasons behind your savings plan. Consider that you plan to put away three to four months of living expenses if possible. It’s a healthy goal, Huang said, but “some people aren’t motivated by the overall potential of having to pay for emergencies or interrupted work.”
Reevaluate your savings plans to make more sense Why: maybe you want three to four months of living expenses to travel around the world, or create a ramp for a long-awaited career pivot. If you need funds for real emergencies, you’ll be thankful you have them.
Set Realistic Goals
Remember, small and consistent steps pay off. Use the SMART criteria (Specific, Measurable, Attainable, Relevant, Time-bound) to effectively establish your goals. For example, Huang noted that when budgeting, we always remember our annual salary, but this is a big mistake.
If you make $75,000 a year, you might have a $6,250 monthly budget in your head, but after deductions you could take home about $55,000 a year, or $4,583 a month, depending on where you are living. Also, make sure you really understand your fees, along with any fees and interest rates, so you know how much you’re paying to carry the balance on the credit cards.
If you are realistic about what your actual costs are, you can make informed decisions. Maybe a big savings goal shouldn’t be your priority this year.
“There is an order to these things,” Huang said. If you’re carrying high-interest debt, it might make more sense to pay that off first so you can prioritize saving after the financial bleed.
New Plan Every Month
Huang suggests that once you have a realistic sense of your income, you can and should create a new spending plan each month. Things change, different events and responsibilities come up, and with the monthly check-in you can recalibrate if necessary rather than throwing your entire savings plan out the window.
He also suggests having a system that allows you to check your actual spending each week, to track progress toward your monthly budget and goals.
When it comes to menial tasks, automation beats determination every time. Faced with the decision to spend or save, saving often takes a back seat. Take the decision by pre-setting transfers to bills or savings accounts from your salary, giving the bank enough time to use your salary funds.
Trust in Reliable Financial Tech
In the digital age, apps and online tools make keeping track of finances simple. Automate savings transfers, set up account alerts for overspending, and use budgeting apps to accelerate your savings growth.
Finally, Huang shares these quick tips to jump-start your progress in 2024:
Shop around for better insurance policies to lower your monthly or annual bills.
Return the things you bought but don’t need – get a double win by decluttering and fund recovery!
Reduce costs across the board – an easy place to start is subscriptions.
Improve your investment portfolio – schedule a check-in with a trusted advisor.
Negotiating fees — many vendors would rather lower their fees than lose you as a customer.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Didn’t Reach Your Savings Goal Last Year? Here’s how to do better in 2024