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The new year is approaching, offering a fresh start for many to take control of their finances. Resetting and reviewing spending habits is essential for financial health.
However, money resolutions often fail, as noted by personal finance expert Jade Warshaw, co-host of “The Ramsey Show” and author of the upcoming book “What No One Tells You About Money.”
While paying down debt and creating a strategy to stop living paycheck to paycheck is pivotal for lasting financial well-being, Warshaw highlights the need to address the emotional aspects of financial behavior.
In an exclusive interview with GOBankingRates, Warshaw shared her insights on three common money resolutions that often fall short, and what practical steps can facilitate long-term change.
Sticking to a Budget
Creating a monthly budget is key to gaining financial clarity and preventing debt. However, many struggle with adherence to their budgets, leading to disappointment.
“Most individuals draft an ideal budget that may not align with their reality. It is frequently too strict or unnecessarily complex, resulting in frustration and abandonment after a few weeks,” Warshaw noted.
Warshaw encourages a more realistic approach: “Begin by analyzing your current expenses rather than theoretical spending. Automate manageable elements and continuously monitor your progress. Incremental adjustments outperform grand promises every time.”
Aspiring to Eliminate All Debt
Although Warshaw and her husband successfully eliminated $460,000 in debt, she is skeptical of those pledging to pay off all debt in a single year.
“Such resolutions are often impractical and overly broad,” she cautioned. “When set as all-or-nothing, individuals may become discouraged once life’s uncertainties arise.”
To make a significant impact, she advises pinpointing a specific debt to tackle first and prioritizing it, as having a focused goal fosters momentum and maintains motivation.
Overcoming Overspending
Overspending is a prevalent issue that can lead to debt accumulation. When individuals express intentions to stop overspending, it often turns out to be more of a hopeful wish than a strategic plan.
“Overspending is often driven by emotions rather than calculations, intertwined with stress and personal narratives,” Warshaw explained.
To manage this challenge, identifying personal triggers is crucial. For some, it may stem from boredom or stress, while for others it could be the belief they ‘deserve’ to indulge.
By recognizing these triggers, individuals can disrupt the cycle of overspending. “Assign tasks to your money before the month begins, and check in weekly to ensure conscious spending,” she recommends.
Although breaking unhealthy financial patterns and uncovering the true causes of money struggles is challenging, intentional behavioral changes can help dismantle detrimental habits.
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