6 ways to make your financial resolutions stickMonday 4 January 2021 | Reading Time: 4 minutes
Most of us make financial resolutions for the New Year, such as saving more or paying off school loans. But following through with those resolutions is a lot harder than making them. Oftentimes, our resolutions don’t even make it past the first couple of months! If you're looking to break the cycle, here are six ways to help you stay focused on your 2021 goals.
Keep your goals realistic
It’s important not to overreach and shoot for extremely difficult goals in 2021. Chances are you won’t be able to whip your entire financial life in shape in one year. Proclaiming that you’ll pay off all your credit card debt, for example, might set you up for disappointment. Instead, a more reasonable goal would be to pay off the lowest balance credit card. If you’re successful, you can always set another goal to pay the next highest card. This same methodology should be applied to other goals, like saving for a house, paying off school loans, saving for retirement, and more. Make your resolutions manageable and realistic, and prioritize them. Select a few goals that can have a big impact on your finances, such as setting up an emergency fund, saving a reasonable amount of money for a large goal, like buying a house, or opening up a retirement account and committing to investing money into it.
Read up on financial products and services
If you want to make sound financial moves, it’s a good idea to have a working knowledge of potential strategies, services, and financial products, and how they can help you with your money. Start by following and reading finance features by reputable journalistic organizations. Find out more about products by visiting sites like the Consumer Financial Protection Bureau (CFPB). Its “Consumer Resources” section offers guides on important financial decisions like planning for retirement and buying a house and provides answers to questions about credit cards, mortgages, auto loans, and more.
Outline your path to success
Having financial goals in mind is great, but they can only be achieved if you have a way to implement them. For example, if you’re looking to save money you need to know what the target amount should be, how much you can save toward that goal each month, where the money will come from, how you can save so you don’t spend it, how you might be able to invest the money you save and grow it, etc. Having a plan that addresses all these moving parts is an important step to ensuring you have a quality, financial goal and you can realize it. It’s also a great way to help you stick to the program. Start by:
- Deciding what action steps are needed to reach your goal
- Creating a schedule for your action steps
- Following through on each scheduled action step
Revise your budget
When you create new goals you’ll need to adjust your budget accordingly. This means revising it to include your resolution. Spend the time to see what money moves you need to make it work. Are there budget items that you can cut back on? What can you sacrifice each month to help you achieve your new goal? The trick is to make a good budget that ensures your 2021 goals are accounted for each month and fit in with your finances comfortably.
Automate your money
When it comes to resolutions, you may wonder if you have the willpower to carry through with your goals. One of the ways to worry less about your resolve is to automate your finances. People who automate their savings save more than those who don’t, on average. One of the easiest ways to automate is to open an online savings account and have money automatically transferred to it each time you’re paid. You can also set up other automatic deductions, such as your 401(k) contributions or money for an emergency fund.
Confide in others
Sticking to resolutions can be a struggle, but you can make the challenge a little easier by sharing. Ask a friend or family member to help keep you on your toes. Having someone who’s invested in your goals and will help you stay on the right path can be a great motivator. Not comfortable discussing your big financial issues like debt with close friends and family? Try connecting with strangers who may be going through similar difficulties, or share your financial goals. You can find personal finance groups to join online.
Sticking to a goal, regardless of whether it’s a New Year’s resolution or not, can be difficult—especially if you don’t have a plan forward. It’s often not as simple as flipping a switch or turning over a new leaf. But it’s important to stick to it so you can achieve your goals.