- Thomas M.
- Monday, January 02, 2023
There are a lot of financial websites and blogs about what to do with your finances at the end of each year. There are even more about New Year’s money resolutions. What do people actually want to accomplish, though? Let’s turn to a survey from November 2022 by market research firm Pollfish.
Put your money to work
The survey results break down certain topics by age group: Baby Boomers, Gen X, Millennials, and Gen Z. In one comparison, younger generations have the goal of investing, while older generations want to pay off debt and save for retirement. In both of these cases, people want to put their money to work. That makes sense at any age!
Whatever investment vehicle you choose, whether it’s a CD, treasury bill, mutual fund, ETF, real estate property, private business, etc., make sure you understand how it works, down to the risks and fees. If any of these terms are new to you, Investopedia has a good online dictionary to get familiar.
Get out of debt
Here is another category older and younger generations seem to have in common. Everyone who has debt wants to get rid of it! The types of debt tell a story, though. Of those respondents paying off debt, older generations have a mortgage to wrestle, while both generations have credit card debt. A small slice of the younger generation has “Buy Now Pay Later” debt, so named after the trend of stores offering to sell merchandise on credit.
If you have several debts at once, there are two popular methods of paying them down. One is called the Snowball method, named after how a rolling snowball starts small and picks up size and momentum as it goes. Under the Snowball strategy, you would make the required minimum payments on all your debt and put the rest toward the smallest amount owed. As each debt is eliminated, the purchaser feels motivated to knock out the next debt in line. Some people benefit from the psychological push.
The other method is the Avalanche, and it saves the most money. With the Avalanche, you would still make the minimum required payments, but the rest of your money would go toward the highest-interest debt. This may take longer to see the first source of debt disappear, but it would result in the least money spent overall.
Create and stick to a budget
This goal can be accomplished a number of ways. You can track expenses in an app, maintain your own spreadsheet, consult with a financial advisor, write down your purchases on a dry erase board, or even withdraw your money from cash envelopes funded in advance. This is a case of “whatever works,” as long as you know what you are spending and saving, and why.
There is an excellent blog post at Student Loan Hero that describes five different personal budget methods.
Become financially literate
"40% of U.S. adults give their personal finance knowledge a grade of C or worse." So states this eye-opening quiz on WalletHub that helps you determine your financial literacy. After you receive your score, the correct answers are revealed and explained so that you can fill any gaps in your knowledge on the spot.
Richland Library has a wealth of databases and resources for increasing your financial literacy, including book recommendations and blog posts.
Get comfortable talking about money
This topic was not on the survey and could take up an entire article on its own. I added it because, across many conversations with all ages, a lot of people are reluctant to say a word about money aside from “I know I should know more.” Teaching yourself is one thing, but connecting with a loved one about something as personal and vulnerable as money can be awkward and difficult.
I recommend this Kiplinger article, Talking To Your Family About Money by Salene Hitchcock-Gear.