A couple weeks ago I wrote about the strange place I found inspiration for my 2013 goals. This week, I’d like to address New Year’s Resolutions head-on. Every year millions of people write out a fresh list of goals in the hopes of making the next twelve months better than the previous dozen. We creative people are no exception: in our world, it’s often the well-disciplined artist who ends up on the road to loftier goals, while the dreamer without clear, concise milestones spends another year chasing the same first-tier plans (and never can figure out why he doesn’t achieve anything….). You know the ones; they’re the artists with grand ideas, fantastic plans, and nothing to show for it except a series of excuses.
One mistake that even big businesspeople make, is that they set professional goals, but forget about the fuel to get them there. It might not be the most glamorous activity, but remember your financial goals; don’t just focus on your art. By making sure that your financial picture is healthy, you’re bound to have the fuel ready to have a wonderful 2013 in your craft. By placing well-executed goals, you’ll get where you want to go faster, and with less bumps along the road.
Some Financial Goals to Act On
Emergency Fund – If you don’t have a cash reserve, now’s the time to start one. Anything can happen…and probably will….in 2013, so you’ll want the protection to know that when bad news occurs, you’ve got the money in the bank to easily get through it.
What’s a good reserve? Generally, I recommend having at least three months expenses in a safe place away from market fluctuation (like a bank account).
Saving – Saving money isn’t a “nice” thing to do; it’s a necessity. You’ve heard the story about animals storing nuts for the winter? This is a parable for a reason. Saving money is the only way to ensure that in the future you won’t have to work as hard as you are now. Are you afraid of saving money? Don’t think you have enough to save? Think about this: how afraid are you going to be when you can’t work in the future and you haven’t saved anything? That’s a scarier proposition, isn’t it? That’s why it’s important to start right now, even if it’s only a small amount.
What’s a good plan? Raise your savings by 1% of your income right now. If you bring home $500 per week, that means saving only $5 more than you were previously saving! Raise it 1% again every six months. This is a great way to “test the waters” in saving money and to prove to yourself that it can be done. By putting just a little bit more away every six months, you’ll be at 6% of your income within three years and in five years you’ll be saving 10% of your income.
Protecting Your Downside – We know this: something WILL go wrong in 2013. Sadly, there’s no way to know where disaster will strike, so it’s important to get your insurances in a row across the board.
How do you approach this? Use websites that aggregate a bunch of different insurance carriers and compare that way. Many people avoid insurance because they don’t want to take the time with boring financial people. By keeping it online and using websites that compare dozens of products, you can make the process easy, fun, and most of all, quick.
Creating a Budget – This is maybe the single-most often written financial goal and the one most broken. People seem to have more fun falling off this wagon than any other (except maybe weight loss), and for good reason. We’re not great at sticking to a plan of spending, especially if our whole life we’ve never expected this much from ourselves. If you’ve always just spent what you made, this is a brand new habit, and it’s going to take some work to instill the discipline of maintaining a budget.
How to make it work: First, realize that you’re going to screw this one up. It’s okay! Just don’t quit trying to get it right. Give yourself an allowance for “fun money” and a set amount for areas of weakness, like eating at restaurants or entertainment. Set the amount of money you’re going to spend on “fixed” areas in envelopes. Once that envelope is empty, you can’t refill it until you reach the next period when you refill all the envelopes. By sticking to this type of plan, you’ll teach yourself to go without when you “overdo it.”
The big question here is “when.” When are you going to do all of these tasks? You need to give yourself a set schedule because if you just say, “I’m going to do it,” nothing will happen. Make this process easy by putting each of these tasks into your calendar. When the day comes, realize that your brain is going to come up with a ton of other tasks that “just have to get done first.” Throw these off! Your brain doesn’t want to learn a new budget, evaluate insurances or save more money. These are tasks that sound “hard.”
You’ll find that the success of starting your budget is only the beginning. As you accomplish the first tasks in each of these areas, you’ll identify opportunities and pursue them. You’ll learn shortcuts that make it easier to complete each task. The initial kick you got from starting down the path is nothing compared to the feeling you’ll have when there’s money in the bank, you’re protected from calamity, and you have a budget for the future. In short, you won’t just be better in 2013. You’ll be a force that can focus on your art without distraction and with the knowledge that you’ve developed the skills to handle funding your goals in the future.