Financial resolutions can be made at any time of the year. I’ve read that about 40% of Americans set their resolutions at the New Year. It makes sense. A New Year, a new start.
The most common financial resolutions are paying down debt, building an emergency fund, and saving/investing money. All very good resolutions, but how do you make them stick?
Below are 3 tips for how to make financial resolutions that stick.
Align Resolutions With Your Values
Resolutions are what we want to change in our lives. They are not specific goals, but rather an overlying theme from which our goals are derived. When resolutions align with our values it is much easier to stick with them.
For example, let’s say that your resolution is to save and invest money this year. Why do you want to do this? Are you planning ahead for retirement, school, a large purchase, or perhaps starting your own business? Maybe you want to have money aside so that you feel financially secure. Your reason will give you a clue about your values.
Why is this important? When you align resolutions with your values they become a part of who you are or who you want to be, which makes them more powerful and easier to stick to.
Think of resolutions you’ve made in the past that you did not stick to. Is it possible that they did not align with your values at the time? When we set resolutions based on what we think we are “supposed to do” rather than what is meaningful for us, there is no inner motivation. So, as you list your financial resolutions, try also listing how they align with your values.
Create Helpful Habits To Stick to Your Resolution
Habits lead to change. This could be positive or negative, depending on your habits.
When reviewing your resolutions, take a look at your current habits. Do they support what you want to change?
Let’s go back to the resolution of saving and investing money. Are you currently in the habit of saving some money from each of your paychecks? If not, then that is a good place to start.
The amount you save is not as important as the act of saving. Once you are in the habit of saving from each paycheck, you are also sticking with your resolution of saving and investing money. Over time, you can increase the amount you save based on the specific goals you’ve set.
Create Specific Goals That Support Your Financial Resolutions
Resolutions are the overarching theme. Goals are specific milestones to achieve.
For example, the resolution of saving and investing money is the theme. Once you’ve confirmed that this resolution aligns with your values and that you can form the habits to make it stick, it’s time to make specific goals. For example, how much money do you want to save, and when will you achieve this?
Here are a few tips when setting goals
- Be specific
- Keep it simple
- Create mini-goals that can be tackled in chunks
- Find an accountability partner
Once you’ve set your goals, you can create your plan.
Sticking To Your Financial Resolutions
Sticking to your resolutions and achieving your goal are two different things. Sometimes we just cannot achieve the goals we set. But, that does not mean we did not stick to our resolution.
Maybe your goal was to save $10,000 by the end of the year but because of an unexpected expense, you were forced to use your savings for something else. If you had the savings to use, then you succeeded with your resolution of saving money but unfortunately, your goal needs to be postponed.
Perhaps, you were unable to save $10,000, but you were able to save $3,000. That is a win. You’ve adjusted your habits to help you with your resolution of saving money. Maybe $10,000 was too ambitious for this year but next year you can do it since you formed the habits to help you.
Final Words
Be kind to yourself. It’s easy to focus on our goal achievements and forget about the progress made toward our resolutions. I believe that it is the journey toward the resolution that gives us the foundation to eventually achieve the goals we set.