3 Financial Resolutions Most People Break—and How to Finally Keep Them
Do you remember your 2019 New Year’s resolutions? How did those turn out for you?
It’s a circumstance so common it’s basically a meme: every year, we all start out on January 1st with the very best intentions, only to find ourselves lapsing into old habits before Valentine’s Day has passed.
And after the ubiquitous promises to eat better and exercise more often, financial resolutions typically top the list of well-meant (but quickly forgotten) New Year’s goals.
Even when we know getting our finances in order could make for much smoother sailing down the line, it’s all too easy to get overzealous while making our annual lists of oaths.
What’s more, we frequently forget one of the most important parts of setting a goal you can actually get to: making it specific.
“A goal without a plan is just a wish,” goes a quote spuriously attributed to French writer Antoine de Saint-Exupéry (and seen on Pinterest boards and gym bathroom mirrors the world over).
And many personal development experts and project managers agree that creating specific, measurable, relevant, time-bound goals makes them more achievable—which is the basis of the “SMART” goals system you may have heard about if you’ve ever been on a corporate retreat.
So if you’re ready to turn your financial wishes into reality, read on. Here are three of the most commonly broken financial New Year’s resolutions… and how to reframe them so they have a chance to actually stick.
Resolution #1: Saving Money
Whether your income is small or large, and whether you live in a tiny studio apartment or a decked-out mansion, chances are you want to keep more of your money in your pocket. Or your savings account. Or your IRA.
But it’s exactly the multiplicity of viable reasons to save that can make saving money so difficult. You need to build an emergency fund and prepare for retirement, and you may also be saving for short term financial goals like buying a new car or taking a long-fantasized-about vacation.
Along with a lack of specificity, the goal to save money can also be derailed by the lack of a savings budget. If your savings goal isn’t written into your monthly money plan, the cash you might have saved can easily end up disappearing into discretionary spending.
After all, once you’ve paid all the regular bills, the rest is what’s available to put toward adjustable expenses like food or fun or fitness classes—and if you don’t treat savings like a regular bill, you may not find yourself with a lot “left over” at the end of your paycheck.
Reframed: Saving money for something—and making it a priority.
If you want to save money this year, you could start by deciding what you want to save money for. There are plenty of great options, including growing your retirement, establishing your emergency fund, or preparing to buy your first home.
Short term financial goals like new clothes or a fun getaway weekend are worthy savings targets, too! But it’s hard to stash enough cash for any of these if you don’t have a specific plan set up.
Figure out what you want, how much you need to get there, and then do the math to see how much you need to set aside each month to make it happen.
If you struggle with figuring out how to set financial goals, one way to get a firmer grip on your savings habits is to use a digital budgeting system.
You’ll be able to set budget line items for each and every expense, from monthly rent to weekly pizza night, and you can add your allotted savings goal in to ensure you meet it on a regular basis.
Automating your savings is another great way to help make sure it’s a habit that sticks; many retirement plans allow you to set up automatic contributions from each paycheck (or at regular time intervals), too.
Resolution #2: Spending Less
The other side of saving more is usually spending less—unless you score a raise or start a side hustle.
But again, a resolution to spend less of your hard-earned cash can quickly be stymied if you apply it as a blanket rule. Living costs money!
How can you make a more concrete effort to part ways with less of your Benjamins?
Reframed: Spending less in specific categories, or creating a shopping ban
Instead of resolving to spend less money in general, you could choose specific categories in which you can make relatively painless cuts.
For instance, maybe you can afford to spend less on dining out (and meanwhile work on that other New Year’s resolution to get better at cooking). Or maybe you can resolve to find a living situation with considerably lower rent, whether that means moving or getting a roommate.
Another interesting way to set specific rules around spending is to create a shopping ban, where you give up certain categories of spending entirely.
Cait Flanders, the author of The Year of Less , spent a year foregoing shopping altogether, though she did make certain pre-designated exceptions including groceries and items she already knew needed replacing.
It may sound extreme, but it could be a great way to get more comfortable repurposing and reusing items, as well as figuring out just how little you really need to get by. And meanwhile, you could save a tidy sum if you have a regular shopping habit.
Resolution #3: Paying Off Your Credit Cards
Any financial goal is that much more challenging when you’re struggling under the weight of high-interest debt—and credit card debt is one of the worst culprits. With annual percentage rates (APRs) that frequently rise to 20% or more, there’s no wonder so many slip into the consumer credit card spiral.
High interest rates mean that credit card debt can be hard to chip away at, especially with the effects of compounding in place. Rather than struggling to get ahead of multiple credit card payments, there could be a different way to dial down your debt.
Reframed: Consolidating your credit card debt.
Credit card consolidation is a form of refinancing that involves paying off your existing credit accounts with a new loan or line of credit. And while it may sound counterintuitive to open another loan to pay off the loans you have, it can actually be a smart strategy. Here’s why.
When you take out a debt consolidation loan or a balance transfer credit card, you no longer have to keep up with multiple bills at different times of the month. Through consolidation or a balance transfer to one credit card, you can pay off your existing creditors and only worry about paying down debt to a single lender—a lender who may just be able to offer you a lower interest rate than your existing credit cards had, possibly saving you money.
Some balance transfer cards offer a 0% APR promotional period, which can be a very effective money saver if you can afford to pay off the balance within this period.
Personal loans are another option for credit card consolidation, and they might provide the benefit of terms that work better for you and a predictable repayment schedule with an end date.
And if you qualify for a lower rate with a personal loan, there’s a good chance you could pay less in interest than you would have over the long term—which could lead to a happier New Year and beyond.
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