Sticking to your financial resolutions for the new year can be hard, but there are strategies you can use to help set yourself up for success and make progress towards achieving your goals.
New Year’s resolutions (including those related to personal finance) may be easier to write than to keep. For some people, the well-intentioned goals of saving money, paying off debt, or improving credit scores (just to name a few) may sound promising on paper but often don’t make it past the first few months of the year. What may start off as a clean slate of good intentions and positive action can sometimes become a stockpile of stress from trying to stick to the list month after month. The good news is that there are ways to help prevent these resolutions from ending up on the wrong side of the self-improvement ledger.
1. Be specific in describing your resolutions and goals.
One way to help stick to your resolutions (whether financial or otherwise) is to be very specific in articulating your goal. It’s one thing to say “This year, I’m going to save money” and it’s another to say “I’m going to move $X from every paycheck into savings” or “I’m going to cut back on takeout by cooking dinner at home 4 times a week” (which can improve both your health and your bank balance). General goals like “improving your finances” or even “starting a budget” are harder to implement without explicit detail behind them. If you can articulate your goal or resolution with specificity so that you know precisely what you are setting out to accomplish, you may have a better chance of seeing results.
2. Focus on one (or just a few) resolutions instead of trying to tackle a long list all at once.
Improving your finances is of course a worthwhile goal, but trying to overhaul every aspect of your financial life all at once is not realistic. When you sit down to think about the areas of your financial life that could use improvement, try to focus on one or just a few topics most in need of your attention. If you try to tackle a mega-list of resolutions all at once, the thought of sticking to any single goal can become overwhelming.
Try to pare your list down to the area or areas that are most important to you so that you do not become fatigued by all the tasks ahead and just give up. Information overload can sabotage even the best of intentions. If you have a list of financial resolutions as well as other general resolutions for other areas of your life, the combined list can become discouragingly long and thwart your progress in any single area. Try to focus on a smaller number of goals or at least one at a time to give yourself the best chance of making progress.
3. Prioritize your list and approach them in order of importance to you.
As a related concept, if you can’t select just one or even a small number of resolutions and your list is still long, then try to prioritize the different items. Decide which topic is most pressing and focus on that one first. Once you have made progress towards that specific goal, keep the momentum going on that topic, but switch some of your attention to the second item on your list (and so on throughout the year).
You might find that breaking your list into a prioritized ranking of goals and addressing one at a time can help you feel less overwhelmed. The mere exercise of prioritizing these goals can also be very helpful because it can give you an inside look into what matters most to you and thereby provide you some insight into your values and priorities that you might not have articulated or realized before.
4. Share your resolution(s) with someone else for accountability.
Some people like to keep their resolutions to themselves, and that’s of course an individual choice. But if you are willing to tell someone else what you are trying to accomplish in the new year, you might find that the act of communicating that goal out loud could produce some tangible benefits. First, you will have someone to report to (if you want), to keep you accountable. You can check in with this person, and that will not only give you an incentive to stay the course but will also help you monitor your progress. Second, the mere act of stating a particular goal out loud might help make it more tangible or concrete in your mind. Thinking that you’re going to pay down your debt might not be as powerful as telling someone you trust that you’re going to pay down that debt.
5. Identify benchmarks for your own progress and break down larger goals into smaller pieces.
It’s not realistic to expect major changes to happen overnight. It can also be discouraging to have good intentions but to see only small bits of progress. If you can break down your goals into discrete elements and try to set reasonable and achievable benchmarks, you might have a better chance of achieving the longer-term results you are seeking.
For example, instead of trying to save enough money for a down payment on a house (which can look like a discouragingly large total on paper), try to come up with realistic savings targets that you can achieve on a timetable that works for you. Try to save $X per week or per month instead of just staring at the overwhelming total you will need to save, which could take years or more. It’s easier, more productive, and less stressful to celebrate regular small wins instead of waiting around for major results, which can take a very long time.
6. Set yourself up for success by having a plan to implement your goals.
It’s important to have meaningful and worthwhile goals to work towards, but you also need a specific plan to help you implement those goals. For example, if you decide that this is the year to finally start paying off your credit card debt, you will have a greater likelihood of success if you know what steps you’ll need to take to reach your goal. (Take a look at the wonderful resources that The Debt Free Guys have on the topic of paying off credit card debt, including their Debt Lasso Method.)
Resolve and determination alone can be powerful in helping you achieve your goals, but having a plan with specific action steps will greatly increase your chance of success. Knowing what you want is the first step, but you also need to know how to get there.
7. Realize that any step in the right direction is still a victory.
Improving your finances does not have to be strictly results-oriented. Making progress and moving forward can be just as important as achieving a certain dollar amount or end result. For example, if you are trying to save money, eliminate your debt, or improve your credit score, the habits and methodologies that you establish can be more important than the actual end result in the long run. So even if you save less than you had hoped, wipe out some but not all of your debt, or increase your credit score by 50 points even though you were hoping to see a 100-point gain, these are still huge victories that should be celebrated. The steps you take and the habits you establish to reach larger goals can be more important to your long-term success (and to the sustainability of that success) than just reaching certain monetary goalposts.
8. Have a positive mindset.
People sometimes joke about how quickly their New Year’s resolutions will be broken. What might have started off as a motivated, sincere, and enthusiastic attempt to establish a new habit or pursue a new goal in January sometimes has a way of fizzling out on a quiet February day. If you start the new year with the thought that you’ve tried this before but have never succeeded, you are setting yourself up for failure. Telling yourself things like “Here I go again” or “Well, I’ll give it a try but I know it’s not going to work” can just sabotage your efforts from the beginning.
Your mindset is more powerful than you realize. Instead of talking yourself out of progress and accomplishment, try to be your own best advocate. “This year will be different” or “I’m not giving up this time” can go a long way towards helping you succeed. If you’ve tried to improve your finances before but haven’t seen the results you want, give your mindset a boost of confidence.
If you tell yourself you can’t do something, you will probably be right. The opposite can also be true.
9. Don’t expect perfection.
New Year’s resolutions sometimes involve breaking habits that might have been hanging around for years. Changing your old ways and creating new, more constructive behaviors can be very difficult. Give yourself time to make meaningful changes, and don’t expect perfection.
Setbacks can derail good intentions. Instead of giving up on a resolution, take a step back, acknowledge that you are human, dust yourself off, and try to move forward again. In the long run, these small setbacks could just be detours that might even lead you to better ways to accomplish your goals. Any goal worth devoting your time to will undoubtedly present you with challenges from time to time. Progress is not always a straight line. Give yourself room to learn from mistakes along the way.
Putting it all together
In addition to improving physical fitness in the new year, many people also include financial fitness in their list of goals and resolutions. Specific areas of focus often address topics such as: saving money; budgeting; reducing credit card or other debt; improving credit scores; and learning to (or starting to) invest. Other topics can include talking more about personal finance with partners or aging parents; taking steps to increase income (such as learning new career-related skills or starting a side hustle); or generally trying to improve your own financial acumen by reading more, listening to podcasts, attending webinars, etc. Whatever your goals and resolutions for the new year, consider incorporating some of the above suggestions to help set yourself up for success. If your goal is worthwhile, don’t give up!