Are you working on your New Year’s resolutions?
“A New Year’s resolution is a tradition…in which a person resolves to change an undesired trait or behavior, to accomplish a personal goal or otherwise improve their life.” Wikipedia
93% of people make New Year’s resolutions. (American Psychological Association)
45% of people give up on their resolutions by February.
What Happens to Our New Year’s Resolutions?
According to an article in Business Insider, three reasons people are not able to keep their New Year’s resolutions are:
- they’re not specific enough
- the resolution is framed in the negative rather than the positive, and
- the resolution is not a true reflection of what you actually want.
Clarify and Honor
Two pieces of advice from theconversation.com could be the key to keeping your New Year’s resolutions:
- “Clarify and honor your values.”
- “Change your environment to make it easier.”
What might this look like in relation to your financial New Year’s resolutions?
- Realize that paying yourself first is a way of honoring yourself.
- Don’t be afraid to dream about financial freedom.
- Clarify your long-term financial goals.
- Spend less time on social media to avoid the FOMO factor.
- Automate your bills so they are paid on time.
- Hang out with other people who are also committed to achieving financial freedom.
Don’t Give Up on Your Resolutions
We all have setbacks. How you deal with those setbacks is a primary factor in your ability to keep your resolutions.
If your goal is to lose weight or to stick to a healthy diet but you find yourself polishing off your favorite ice cream, be kind to yourself. Don’t quit.
Let’s say your goal is to eliminate or drastically reduce impulse spending. And then you find yourself in your favorite retailer and you see a sale that looks too great to pass up. You end up buying stuff you didn’t really need. Be kind to yourself.
Tomorrow is another day. Begin again. Stay committed. Honor your financial goals and believe in your ability to achieve them.
What Financial New Year’s Resolutions Should You Set?
The best way to answer this question is to review 2019. If you haven’t looked at your 2019 budget in a while, pull it out or up on the screen.
- Was it realistic?
- Did you spend more or earn more than you intended?
- What about your savings goals? Debt reduction?
- How much progress did you make toward your long-term goals?
Did you make a budget? Remember, this is not a time to be judgmental or get depressed. Simply assess and make whatever adjustments are necessary for the new year.
How to Succeed
Tonya Hansel Tulane University School of Social Work’s director of doctorate programs offers some great advice to help you make a paradigm shift. Firstly, she suggests making only one New Year’s resolution.
- Make it specific
- Use technology to help you meet your goals
- Lean on supportive networks
- Accept yourself
- Celebrate small successes
How Would These Tips Work For Your 2020 Financial Resolutions?
The only way to make financial resolutions is to first envision how you want your life to be. Envision yourself in the short-term and in 5 years. What changes do you hope to make in your life? What kind of financial resources will you need to make those changes? For instance, do you want to move out of your rental and buy a home? Go back to school? Get married? Travel around the world? Launch your own company? Move out of your parents’ house?
Make Your New Year’s Resolution Specific
This is where your 2019 review will help you. Pick one goal that you had trouble with. Was it saving money? Rather than setting a goal of “I want to save more money,” be specific about a savings account. For instance,
“I want to max out my retirement savings accounts in 2020.”
“I want to put away three months’ living expenses into an emergency fund.”
Perhaps your New Year’s resolution will be to get rid of debt. How many types of debt do you have? Get specific. “I want to get rid of my credit card debt.” “I want to pay off my student loan debt.”
Use Technology to Help You Meet Your Goals
We’ve written about the advantages of using financial technology to help you with your financial goals. Using apps to automate your savings, for instance, is one way to ensure that you are not tempted to use your money for something that will derail your financial goals. Automating your bills so that they are always paid on time is one way to improve your credit score. Use apps to help you create a realistic budget and track your spending.
Lean on Supportive Networks
In our blog post about the impact of social media on spending, we talked about filtering your social media feeds. Follow experts, influencers and like-minded people who want to create a healthy financial life.
We all have strengths and weaknesses. Perhaps financial management is not your strength. Or your financial literacy skills are not up to par. This is not a time to be self-critical. If you have trouble paying bills on time and you don’t want to automate them, find someone to help you. Buddy up with someone who shares your financial goals.
Celebrate Small Successes
Set short-term and long-term financial goals. For example, let’s say your financial New Year’s resolution is to get rid of credit card debt. There are a few different methods, but one is to begin with the credit card that has the smallest balance. It will be easier to pay off and give you a sense of accomplishment. When the balance is paid off, celebrate! If you manage to hit the shopping mall with your friends and you didn’t indulge in unnecessary spending, celebrate!