How to Stay on Track With Your New Year’s Resolutions

John Hagensen, MSFS, CFP®

Director of Financial Education

Last Updated
December 30, 2022
Woman sitting on yoga mat in workout clothes writing in her notebook

5 Tips to Help You Keep Your Personal and Financial Resolutions

The new year is a great time to start fresh with your goals, both personal and financial. However, if you’re like many people, you may struggle to keep up with your resolutions for more than a few weeks. Fortunately, there are several strategies that can help you stay motivated and accountable to your goals.

You may be wondering, “why is this wealth manager giving me advice on how to keep my personal New Year’s resolutions?” Good question. First, I’m an overall helpful guy and fellow NYRFS (New Year’s Resolutions Failure Syndrome) survivor (I made that last part up, obviously). Second, all these tips apply to your financial resolutions as well as your personal resolutions. Let’s get started.

#1 – Remove friction.

If there’s one given with New Year’s resolutions, it’s that anything that can possibly make sticking to them more difficult eventually will. That’s why it’s important to plan in advance and remove as much friction as possible.

For example, I’m horrible about hitting the snooze button. No matter how much I tell myself I’ll get out of bed when the alarm goes off, once that moment comes, I can’t resist the temptation of a few more minutes of sleep. However, hitting snooze means I don’t get up in time to hit the gym before work, which derails my resolution to exercise more.

To remove this friction, I recently moved my alarm clock across the room. Now, I’m forced to get out of bed to turn it off. I also set out my workout clothes the night before to remove the challenge of searching for gear when it’s dark and I’m still groggy. After making these small changes, I’ve been much better about getting to the gym each morning.

Removing financial friction – To remove as much financial friction as possible, start by establishing a goal and identifying any challenges that may stand in the way of accomplishing that goal. Then develop strategies for overcoming those challenges. Following are a few examples of common financial goals and quick tips for removing some of the financial friction.

  • Goal: Be better about sticking to a budget.

Strategy: Don’t use cash. Cash is difficult to track. If you want to make lasting improvements to your spending and saving habits, it’s important that you track all inflows and spending. Instead of cash, use a debit card or a credit card that you pay off each month.

Strategy: Transfer excess cash to an investment account. If your goal is to save more for the future, immediately transfer any leftover cash out of your checking account each month. This puts any excess funds just outside of your reach so you’re not tempted to overspend.

  • Goal: Be better about paying bills on time.

Strategy: Go paperless. What’s easier, opening a hard copy bill, noting its due date, adding it to your payment inbox, remembering to write a check, writing a check, finding an envelope, finding a stamp and mailing the envelope or clicking on an email link to make a direct bill payment from your account?

If you haven’t yet gotten on board with paperless bills and statements, now is the time to do so. Paperless transactions are a great way to remove financial friction.

#2 – Choose resolutions that are realistic and doable.

Making unrealistic resolutions sets you up for failure before you’ve even started. Telling yourself that you’re going to work out for two hours a day, seven days a week, 365 days a year is not a realistic goal. Instead, if your ultimate goal is to lose a few pounds or improve your overall fitness, commit to walking for 30 minutes three times per week. That way, if there’s a day that work or other obligations keep you from getting your walk in, you won’t feel tempted to throw in the towel.

Setting realistic financial goals – I hate to be the bearer of bad news, but most people aren’t able to retire in their mid-30s, regardless of how little they spend each month. That’s just not a realistic goal. And, honestly, would you even want to make the types of sacrifices retiring that early would require?

Setting realistic financial goals means making small changes today that add up over time. For example, consider making a commitment to increasing your 401(k) contributions by 1% or 2% every year. It’s unlikely you’ll even feel the impact of this change on your take-home pay, yet the additional savings can have a big impact on your retirement portfolio over time.

#3 – Automate.

One effective way to remove friction and improve your chance of success is by automating as much as possible. The fewer hurdles you face in accomplishing your goals, the more likely you are to achieve them, so try to streamline as much as possible.

If your resolution is to eat healthier, take time on the weekend to put together pre-packed, healthy lunches for the week. That way, you can simply grab one on your way out the door in the morning and have a healthy alternative to a fast-food lunch.

Automate your finances – Today’s online financial capabilities make it easier than ever to manage your finances. Following are just a few ways to automate your finances and accomplish your goals.

  • Set up automatic debits with your credit card company, loan servicer, utility companies, etc. This removes the friction of having to schedule payments each month. Just make a point to regularly check in on your accounts to ensure the correct amounts have been debited.
  • Set up bill pay with your bank. For any service providers that don’t offer automatic debits, consider setting up direct payments through your checking or savings account. It’s still easier than mailing a check each month.
  • Automate your retirement plan contributions through payroll deferrals.
  • Establish a direct transfer from your paycheck to your savings account.

#4 – Create accountability.

One of the best ways to stick to your New Year’s resolution is by sharing your goals with others who can hold you accountable. Do you have a friend with a similar resolution? Commit to encouraging each other when things get difficult. If you’re held partly responsible for your friend’s success, you may be more motivated to succeed for both of you.

If you’ve made a goal to get into shape, consider participating in classes at your gym, or join a running group. After a few weeks of consistency, your new workout buddies may ask where you were after you miss a workout. This alone can be enough to keep you motivated.

Financial accountability – A great way to hold yourself financially accountable is by partnering with someone who shares similar financial goals. Perhaps you have a friend or family member who wishes to make similar financial progress. Consider setting goals together, such as a monthly savings goal or a “no Starbucks week.”

Your wealth manger can also be a great accountability partner, as he/she has unique insight into your current financial situation and goals for the future and can help you establish solid strategies to accomplish your financial resolutions. 

#5 – Set a tangible carrot.

One problem with New Year’s resolutions is that the rewards can be vague and seem far off in the future. Of course, you’d like to improve your health and lose a few pounds, but when there’s a freshly baked cookie right in front of you it can be hard to resist. Sometimes focusing on a more tangible reward is more effective in keeping you motivated.

It can be helpful to set big rewards to celebrate major accomplishments (a trip to Hawaii once you reach your target weight) as well as small rewards for progress made along the way (30 minutes in the steam room after a long workout). The key is to choose rewards that truly motivate you.

Financial rewards – Rewards can be an effective way to motivate yourself to achieve your financial goals as well. After all, achieving a significant financial milestone is a huge accomplishment that should be celebrated! Choose a reward that motivates you without derailing your financial plans. Examples include a night out, a day at the spa or purchasing an item you’ve been wanting for a while.

At Creative Planning, we develop custom financial plans that keep our clients on track toward achieving their financial goals. Are you ready to take the next step toward financial success in 2023 and beyond? Schedule a call with a member of our team.

 

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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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