A New Year’s resolution is a great way to take advantage of the enthusiasm you have about starting anew, channeling it toward something positive; but these resolutions are also infamous for their extremely high failure rate. Financial New Year’s resolutions are no exception. But if you are going to make resolutions for better finances, the new year is a great time to do it. So how do you combat the most common pitfall in resolution making so that your financial desires are finally realized? Here are some tips for better keeping your financial New Year’s resolutions.
Set the right types of goals.
You want to set goals that are challenging, yet also achievable so that you will be motivated to keep going with them. Here are some examples of financial goals that you can make:
- Put $500 into my savings account at the end of every month
- Forego my morning coffee one day per week and putting that money into savings instead
- Go through my monthly bills in January and determine what I can cut out of my budget completely
- In January, take two services (cable, insurance, Internet, cell phone, etc.) and shop around for a new provider that offers a lower monthly bill
Try setting SMART goals.
If you need more help creating the right types of goals, you might want to try making SMART goals. The acronym for ‘SMART’ varies depending on whom you are talking to, but a SMART goal is essentially specific, measurable, action-oriented, realistic, and time-sensitive—specific because it involves a what, a how, and a why; measurable because it will be clear whether or not you have achieved the goal; action-oriented because it details actions that you can take toward reaching the goal; realistic because it is something within your power; and time-sensitive because there is a set time frame that gives it a sense of urgency.
The key is diligence, not willpower.
Remember: you only need enough willpower each day to get you through that particular day of financial decision making. Instead of looking at a long-term goal as requiring a tremendous amount of willpower to get your through an extended period of time, look at it instead as requiring a smaller measure of willpower, applied over and over again on a daily basis.
Remind yourself of your goals daily.
It helps to remind yourself of your financial goals daily by writing it down and putting it in a prominent place where you will always see it, such as your bathroom mirror, refrigerator, or wallet. This will help keep the goal from becoming distant, and it might just help you have the willpower necessary to stick to your goal each day.