A failure to take precise and deliberate action is the reason why so many New Year's resolutions and other goals fail. - Jordan Eyering
Most people plan on making financial resolution at the start of the year. Like other resolutions the key is to start small and gradually work towards larger goals as opposed to getting either frustrated on disillusioned by larger goals which seem unachievable over the short term.
#1 Automate Your Savings
Good behavior is what bring rewards. Make sure your financial behavior will bring you security in your retirement by automating it. One of the reasons that 401k plans are so successful is that good behavior happens automatically with your monthly paycheck.
Data shows that people who automate their savings in other accounts save significantly more than those who do not. Start small if necessary. Small amounts invested over time will add up and give you confidence. They will remind you that when you have the capacity to automate larger amounts you should take that next step.
#2 Track Your Spending
I always ask prospective clients how much they spend monthly. I am shocked at how few have a good handle on the answer to this question. Start by tracking your bank and credit card statements for 3 months and record your expenses on a worksheet. To track cash, write down expenses and keep receipts. In time you'll develop a good feel for what you are spending and where. You can't fix a problem until you know how broken it is.
#3 Build an Emergency Fund
Having even a small amount like $1,000 saved will protect you and your family from financial emergencies such as eviction or missing utility bills. Take this step immediately if you have not yet to put aside $1,000 to protect you from emergencies that could wreak havoc on your family.
Once you've completed saving $1,00 you can work on your next emergency fund. You'll want to save enough in cash reserves to cover necessary living expenses for a minimum of 3 months but once you have that taken care of -work for 6 months of savings. Keep this money in cash and cash equivalents - don't invest this money because investing needs a longer time horizon and you don't know when you'll need this. If you are tempted to spend it put it in a second bank or savings account that is less accessible than the bank where you do your checking.
#4 Contribute to Employer Match Max on 401k
If you have an employer who provides a match to your contributions to a retirement plan you are fortunate. Don't let your good fortune go to waste by leaving money on the table. If the employer provides a formula for matching your contributions make sure you defer enough from your paycheck to get all of the employer match. Otherwise you are leaving compensation which the employer is willing to pay you on the table.
#5 Pay Off High Interest Debt
If you have debt which is 10% or greater I can say with great confidence you'll be better off paying off debt than investing the money. Start with the smallest high interest debt payment. Once you have paid it off apply the payment to your next smallest high interest debt. Continue this debt snowball until you have knocked out all your debt.