Most people are happy that 2020 has ended. It created large structural changes to the economy like never before, and no one is sure exactly what the total impact will be. We must be ready for whatever happens.

Many people discovered they were not as financially prepared as they should have been. Some did not have enough emergency money and had to depend on food banks to feed their families. Others had too much debt or did not have estate plans in force to deal with all of the emerging issues.

At the beginning of a new year, many people make resolutions about changes they hope to make to improve areas of their lives. Most of these grand ideas are abandoned before the end of January. Good intentions without follow through have no value.

New Year’s resolutions are usually not successful because they are too big, and staying motivated for 12 months is a long time. There may be a way you can make changes to your financial life if that is your goal.

First, you have to decide what is your “why.” Why do you want to make these financial changes? Will they make retirement more enjoyable? Life less stressful?

Whatever it is, if you can mentally picture the benefits of accomplishing this change, you are more likely to stick to them. This helps you see the value of any sacrifices you must make.

Next, pick one area to concentrate on, not making many changes at once. Once you have determined your starting point, commit to a 30-day challenge toward that goal. You can often accomplish this in 15 minutes per day.

For instance, if your goal is to save more emergency money, what could you do? Keep a journal of all the money you spend each day. Many people do not understand where all of their money goes each month. Carrying a small notebook makes it easy to record your expenditures.

After a couple of weeks, decide where money is being spent unnecessarily. These funds can be redirected to a savings account. If you save $20 per week, you will have $1,000 at the end of a year. Emergency money has to be kept in something such as bank accounts, where it is available at a moment’s notice when needed. It will not earn much interest, but that is OK for some of your money.

While having an emergency account at a bank is important, having too much money there, with our record low interest rates, could be a poor financial decision. Five-year certificates of deposit are paying less than 1% interest at many financial institutions. There may be other safe options to earn more. Liquidity is important, but having too much can be expensive.

Improving your finances will take a little work. Albert Einstein once said, “Only a fool would think you can keep doing the same thing and get different results.” You can do this.

Next week, we will discuss some other little things you can do to improve your financial life.

Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”

To submit columns on financial planning or investing, email Rick Shrum at rshrum@observer-reporter.com.

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