3 Tips for Making Financial Resolutions That Stick

Have you ever said something like this on January 1: “This year I’ll ____,” and then given up by February? Well, you’ve got company: A popular figure kicking around is that 80% percent of New Year’s resolutions fail!

How is this possible? Is it just that we need a little more energy or willpower?

Nope. In fact, whether a resolution will be hard to keep comes down to if it includes a few key details. 

Who knew? Well, after a quick read, you will. And you’ll know what it takes to make financial resolutions you’ll keep. 

Anatomy of a hard-to-keep resolution 

New Year’s is usually when people talk about making resolutions. But regardless of when you make resolutions – like cleaning your entire home in the spring or resetting your budget after a splurging over the summer – some key details could determine if you’ll follow through.

For starters, if goals are any or all of these things they can be harder to achieve: 

• Vague. Say buying a home is one of your resolutions, but that’s all of the information you’re working with. To get traction, or even know where to start, you’d need more detail.  For example, do you know what city you want to live in or how much house you can afford?  
• Something you don’t want (or need). Home ownership can be a popular financial goal, and may be on your list. But is it something you really want? (What if you prefer renting?) If your resolution is not something you value or want, it’s unlikely you’ll really commit it.
• Too negative. Goals that focus on stopping a habit or avoiding something can leave you feeling discouraged. Example: “I’m going to stop making late card payments.” It could be more motivating to set a goal that’s active. In this case, the fix could be “I’m going to put my payment due dates into my calendar.” 

Keep these goal-setting criteria in mind as you move through the next steps. There are a few more things to consider when you’re coming up with resolutions that’ll stick around.

1. Identify and prioritize goals 

If you have a general sense that you want to do “something” financial but don’t have a specific goal in mind, there are a few ways to get ideas flowing.

You could: 

• Think about things you’d like to do, like travel or start saving for retirement with a 401(k).
• Consider financial situations you’d like to feel more prepared for. If you own a house, for example, you might be concerned that a home emergency could drain your savings.

What if you have a long list of goals? 

If your list feels long, here’s what you can do:

1. Check your goals against the list from the first section and set aside the ones that don’t make the cut.
2. Rank the remaining goals and focus on the top one (or two) so you don’t get overwhelmed.  

2. Turn resolutions into SMART goals 

The next step to making resolutions that stick is creating roadmaps for them.

This is where SMART goals come in.

SMART goals are: 

• Specific (What you want to accomplish)
• Measurable (You can assess progress)
• Attainable (Something you can reasonably achieve)
• Relevant (Why it’s worth pursuing)
• Time-bound (When you’ll achieve your goal)

These attributes can make it easier to know what progress looks like and to keep moving forward.

Some examples:

3. Build motivation into your goals 

It can be tough to stay motivated if a goal feels far away. So consider setting and celebrating mini-goals, like treating yourself to a meal out, when your emergency fund hits $500, and then again when it hits $700, $1,000, $1,200 and so on. 

Celebrating each milestone gives you an opportunity to recognize and appreciate your hard work. It could also help you keep your momentum going.

Another way to get a boost? Tap your social network. You could post what you’re doing and have your network celebrate your mini-wins alongside you. 

The idea here is similar to having a study buddy: Accountability can be a positive push towards your goal. Plus, you can return the favor and cheer friends on as they reach for their own goals.

Ready, set, recap

If there are three things to take away from this resolutions review it’s this: Goals can be easier to reach if they meet specific criteria, if you have clear plans to reach them and you find ways to celebrate the process. 

So who’s in?