New Year’s Resolutions
Financial goals should be a key component of our New Year’s resolutions. The challenge is how do we make sure that our 2018 financial resolutions will succeed.
According to many surveys, the majority of us make the following New Year’s resolutions:
- Lose weight or get into shape
- Quit smoking
- Spend less money/Save more money/Stop wasting money
- Learn a new skill/Go back to school
- Become more organized
- Travel to all the places we’ve always wanted to see
The most popular New Year’s resolution seems to be to lose weight or get in shape. In fact, roughly 75% of us make this resolution. The gyms and fitness centers love us, especially in January. How many memberships have we purchased that, after a few months, sit unused?
A U.S. News report cites that 80% of our New Year’s resolutions fail by the second week in February! Only a month?
But, what about the 20% who succeed? How do they do it?
As I was looking at various articles about what makes us successful with our physical fitness or diet resolutions, I began to see an amazing game plan for how to succeed with our financial resolutions. And as we know, our financial health impacts our physical health. Therefore, whatever we can do to improve our financial health will go a long way to helping us achieve our physical and emotional goals.
A Game Plan for our 2018 Financial Resolutions
In order to succeed with anything, we first need to take a look back and see what happened.
- How did we do?
- What do we want to do better?
In terms of our 2018 financial resolutions, this means:
- How realistic was our 2017 budget?
- Did we meet our financial goals?
- Did we pay off any of our debt?
- Did we take on more debt?
- Did we meet our savings objectives?
- Are we coming into 2018 in a better or worse financial condition? Why?
What are our long-term goals in life?
- For instance, buy a home?
- Get married?
- Go back to school?
- Start a business?
What is it going to cost to do these things?
Write everything down
Whether financial resolutions or resolutions related to exercise, diet, or career, if we don’t write them down, we are less likely to achieve them. Richard Branson wrote in a recent blog post that the simple act of writing down your goals increases the odds that you will persevere. It can be on paper, or your digital device, on the wall, whatever works for you.
Start small. Set achievable goals.
If you haven’t been exercising regularly, setting a goal of running 10 miles every day is not realistic. You will quickly burn out and ultimately give up. Likewise with your financial goals.
For example: “I am going to pay off all my debt this year.” If you have a lot of debt, especially credit card debt, you may quickly become overwhelmed by the task. Instead, break it down into small bites.
- List your credit cards, in order of highest interest rate to lowest.
- Pay off the credit card accounts with the highest interest rates first.
- Set a goal based on some period of months, for instance, “I will pay off card #1 by the end of March.” And so forth.
- Give yourself a small reward after each account is paid off.
- Do the same with your loans, working from the smallest loans first.
Change one behavior at a time.
With our fitness or diet goals, we must first identify any behavior patterns that are hurting us. Are we staying up too late and therefore unable to wake up early enough in the morning to exercise? Are we addicted to junk food or sugar? Once we identify our behavior challenges, we take one at a time and set upon a strategy for change. The same with our financial goals.
- How did we end up with all this debt?
- Is it because we love to shop?
- Do we use shopping to brighten up the dark days?
- Do we forget to pay the bills?
- Do we avoid our money problems?
- Do we have any idea how much money comes in and goes out each month?
Take one money-draining behavior and work to change it. If you go over your budget every month due to spontaneous shopping at the grocery store, take preventative measures. For instance, go with a list. Make sure to inventory before going to the store. Take only cash with you. Even better, inventory, make a list and order for home delivery. And, never go grocery shopping on an empty stomach!
Do you have a problem paying bills on time causing you to pay late fees or increased interest rates? Automate your bills and pay as much as possible through automatic withdrawals. You will never miss the payment deadline. Implement an alert system via your digital device to remind you of due dates. Establish a single day each month and dedicate yourself to paying your bills on that day.
There are a number of great apps that will help you meet your New Year’s resolutions. For instance, Tracks allows you to set up motivating soundtracks to keep you running toward your marathon goal. It also monitors your performance and gives coaching tips. There are lots of financial apps that do everything from automating payment and savings, to budgeting and financial planning. Using these apps will help you succeed with your 2018 financial resolutions.
Get peer support
What happens with those fitness goals? After the New Year, we have no problem getting up early and heading out the door to run, or cycle, or join a fitness class. By the end of January, we prefer to stay under the covers. Fitness experts advise exercising with a buddy. If someone else is going to run with you, at the very least, you don’t want to let them down. That alone can serve as motivation. We can use this model to help us achieve our financial resolutions.
A new exercise routine might lead to sore muscles that make you think twice about going the distance again. You might oversleep and miss that great spinning class that you love so much. You celebrated a promotion with friends, and ate way too much cake, totally throwing off your diet. These setbacks happen. They will happen in your financial life too. After months of careful spending, you suddenly splurge on yourself, friends or family, torpedoing your budget for the month. Mark the setback to “yesterday” and move forward with your eyes fixed on your 2018 financial resolutions. Remember, you are in it for the long-term.
Work with a coach
No matter your physical fitness goal, a coach can be an invaluable member of your team. At the very least, working with someone at the fitness center to help you make the best use of the equipment, set goals and learn how to take care of your body will go a long way toward helping you reach your New Year’s fitness resolutions.
The same is true regarding our 2018 financial resolutions. Qualified financial advisors can help you make the best decisions regarding retirement and other savings accounts, investment strategies, tax savings, and estate planning.