January 2019…New Year’s resolutions. How did it go with last year’s resolutions?
Almost everyone makes New Year’s resolutions. Only 25% stay committed to their resolutions and only 8% accomplish them.
Is it time to kick this annual tradition out the door? What’s the point if hardly anyone succeeds? Are we setting the bar too high?
Maybe the problem is with the New Year’s resolutions we set.
Statista conducted a survey of Americans, asking them to give their 2018 New Year’s resolutions. 53% said their resolution is to save more money and 45% want to get into shape or lose weight. Here are the top 4:
- Save money
- Lose weight or get into shape
- Travel more
- Read more books
This is a financial blog so we’re not going to talk about getting into shape or losing weight. However, if losing weight or getting into shape is on your list you don’t have to go broke accomplishing your resolution. You can exercise on a budget.
So What’s the Problem?
Let’s say you write out your resolution…save more money. This sounds great on New Year’s day. Or maybe you started early and wrote out your resolutions during the holiday week.
Now the holidays are over, and the bills are arriving. Suddenly “save more money” seems less doable. Or maybe you want to improve your credit rating. But you charged a lot of stuff to your credit cards, which you cannot afford to pay.
What happens to your great New Year’s resolutions?? Maybe we shouldn’t set resolutions.
Some of the most famous people we know don’t make New Year’s resolutions. Oprah Winfrey, Tim Ferriss, and Melinda Gates, for instance, say they avoid them. It doesn’t mean they don’t set goals. They just have a different way of doing it.
The Tim Ferriss strategy is quite impactful. He says he takes a piece of paper and draws a line down the middle. He puts the label “positive” on one column and “negative” on the other. Then, he goes through his calendar and looks for all the activities or comments that triggered a negative emotion for that month. He puts them in the negative column. He does likewise with the positive emotions. Then, he relabels “Negative” to “Not-to-do-list.” He says to keep this list where you can see it, to remind yourself of what you don’t want to repeat from the previous year. The positives should become the first actions you add to your “to-do” list.
Set Goals Instead of Resolutions
Goals are different from resolutions. Goals are specific and actionable. Let’s make “save more money” or “improve my credit score” a vision or mission statement. The Tim Ferriss strategy is a great way to organize concrete action steps.
- Organize the past year’s expenditures by month. Where did the money go? How much money went out of your pocket and you have no idea what happened to it? How many times did you go out for meals or order carryout? Trips to the cafe?
- What about savings. How much did you save each month? How much did you save over the year? Were you able to put money into retirement? An emergency fund? Investments? Toward future dreams, such as buying a home, new car, going back to school, etc.?
With a goal of “save more money”, you can begin to write out concrete action steps to take this year to meet that goal, based on your “negative” and “positive” lists, which you will now turn into, “not-to-do” and “to-do” action items.
How are you going to save more money?
- Do you need to increase your income? How will you do it? Promotion? Raise? Second job?
- If you need a new job, what steps do you need to take to find one?
The idea is to make your actions steps very specific, funneling down until you reach your goal of saving more money.
Set a goal for how much of your income you want to save. For instance, “Save 15% of my income.” What action steps do you need to take to make this work? Are you disciplined? If not, do you need to automate your savings? There are some good apps that can help you.
Do you need to reduce your expenses?
How will you do this? First of all, you need to track your expenses. Where is the money going? Make a plan to do this every day, similar to what you would do if your goal is to lose weight. You can use free apps to help you track your spending such as Spending Tracker or Expenses OK.
The more specific you are, the greater the chances that you will realize your overall goal.
Reviewing Your Goal is Key
Don’t leave that piece of paper sitting in the drawer. Pull it out weekly, assess, give yourself credit for the accomplishments and support for the things you still need to work on. Set up a reminder for yourself so you don’t forget to do this each week.
It can be challenging to stick to your goals. Find a mentor to help you, similar to an exercise buddy.
Happy New Year!