Follow 7 habits for a money savvy, prosperous 2013

Taking control of our money often sits at the top of our New Year’s resolution lists.

Yes, this time will be different. We really will change. Spend less. Save more. Eliminate debts. We’re determined and optimistic. We read books, set goals and start with gusto – only to lose steam a short while later, our best intentions the victim of old patterns.

So how do you make change stick, and get results you want?

Develop new habits. Start with the steps below and go slowly, adding the next action only when the previous step is complete. New habits often die from doing too much too fast. Achieving control of your money can become a reality by cultivating these seven financial actions:

1. Start small.

2. Dream.

3. Plan for emergencies.

4. Be accountable.

5. Listen.

6. Be creative.

7. Reward and renew.

Habits emerge when knowledge, skill and desire intersect. Good and bad habits arise from this same point. What you will choose: immediate gratification, or lasting happiness? Let’s examine each of the seven actions.

Start small

Taking control of your money can feel overwhelming. So begin with baby steps: First, determine how much money you bring home each month. Then, add your debt – all of your debts except the mortgage. List them from smallest to largest.

Dream

Have a dream powerful enough to change your behavior. Make a collage illustrating your dream. Keep the poster board where you can see it every day. Keep a journal about habits you want to change and why. What are the bad habits, and what benefit do you receive from them?

Plan for emergencies

The unexpected happens, so prepare. Put aside $1,000 now for mini-emergencies. After paying off debt, build your emergency fund to three to six months of expenses.

Be accountable

Tell the truth about your financial choices and vices. Talk with your partner or a trusted friend weekly and review all your spending. When you’re off track, re-establish your commitment.

Listen

Listen to yourself and your partner about priorities. Develop a budget reflecting these priorities. Make sure it includes everything you spend money on each month plus occasional expenses such as car repairs, etc.

Be creative

Budgeting and paying off debt require creativity. Where can you tighten your budget in order to pay more toward your debts? Find a way. When extra money comes in, such as a tax return, use it to reduce debts or add to your emergency fund.

Reward and renew

Celebrate your successes, renew your commitment when you falter and make sure your budget includes miscellaneous spending money and money for entertainment. You can have fun, too.

These steps have the power to transform your financial life. The choice is yours.

matt.kelly.durango@gmail.com. Durango resident and personal finance coach Matt Kelly owns Momentum: Personal Finance. www.PersonalFinanceCoaching.com.