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How To Stick To Your Financial Resolutions

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This is it. The Year. The year you pull off your New Year's Resolution to become financially fit. The year your friends turn to you, because you are that person who has it all together when it comes to managing money.

Whatever your goal — to create an emergency account, pay off your student loans, maybe have enough money to make a down payment on a new home — to get there, you need a plan to follow through on your resolution. We have three tips that can help you stay on track.

Create a SMART strategy

Resolving to save money is great, but extra cash isn't going to just materialize in your bank account. You need a plan, like maybe taking on a side job and saving your extra income, cutting out small expenses, or a combination of both.

But is your plan SMART? — Specific, Measurable, Attainable, Realistic and Time-bound? SMART goals can help break goals down and put them within reach. In terms of financial resolutions, applying it could go like this: Instead of making a vague resolution like, “get your finances in order,” make it Specific, as in, “create an emergency fund.”

Once you've figured out your approach, make sure your resolution is Measurable by adding a dollar goal: “Create a $20,000 emergency fund,” (the ballpark for an emergency fund is 3-6 months of expenses.) Then, set milestones to check on your progress. Let’s say you started on January 1. On January 31, check your savings total. Did you meet your monthly goal? If not, figure out what you need to adjust to get there in February.

Or, see if your January goal was even realistic in the first place. It's important to ask yourself before you set out to determine whether the goal is Attainable. 

While a $20,000 emergency fund may be a laudable goal, you may need to pick a more Attainable number if reaching it requires putting away more than $1,600 every month, while your take-home pay is less than $3,000 a month and your expenses are $2,000.

Next, make sure your strategy is Realistic. You can say you will walk everywhere all year to avoid spending money on gas or bus fare, but can you really get everywhere you need to go on foot?

Finally, make the resolution Time-Bound by setting a deadline: “Create a $20,000 emergency fund by December 31.”

Make your goals public to stick with them

If no one knows about your goals for the year, it may be tempting to quietly pretend you never made them.

On the other hand, what if you had told everyone you know about your savings goals? Knowing that people may check in on how you're doing in mid-March and beyond can be an incentive to keep going when the saving gets tough.

The effectiveness of this pressure is backed up by research. One study showed that people who sent their goals to a friend, then shared regular progress reports, were significantly more likely to achieve those goals than folks who kept their goals to themselves.

If you still want even more help following your resolution, buddy up. Choose a partner to save with, and report progress to them regularly. You can even join a money-saving support group if that's your style.

Reward progress

If you're working on a year-long savings project, twelve months is a long time to wait for the payoff.

To keep yourself motivated, give yourself a small reward every time you hit a milestone. Reward doesn’t have to mean spending money or spending a lot. If you've met your savings goal for the month, maybe celebrate by binge-watching a favorite TV show. Or if you and your partner gave up restaurant meals for a whole month, an ice cream date could be just the encouragement you need to keep going.

Mini rewards matter: Research shows that we are more likely to stick to long-term goals if we get immediate rewards along the way.

Armed with these tips, you should be ready to take on any obstacles you hit on the road to money saving success. Happy New Year — and let's get saving!

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this site were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA or any of their affiliates, subsidiaries or divisions.