A framework to help you be among the 8% that sticks to resolutions
Will you make a New Year’s resolution this year? One of the smartest ones could be to get your finances in order. But keeping that promise to yourself is another matter.
A lot of people make money resolutions. According to study after study, the most popular resolution every year is to lose weight, followed by getting organized and saving more money. It’s good to see that a financial-related resolution is in the top three.
Here is a framework for making that New Year’s resolution stick.
Past Performance is No Guarantee
Many Americans are still trying to dig out of the hole after the 2008-09 financial crisis and the COVID bear market of 2020. Some of us are feeling like we missed the bull market of the past 10+ years, or the market rebound post COVID-bear, and might take on too much risk in an effort to catch-up.
No matter your past investing history, there is always more we can do to better the financial picture for ourselves and our families. The key is to make a plan.
Sadly, some don’t bother making a New Year’s resolution because it seems futile. Indeed, few of us are able to keep to what we resolve each year. Did you know that while the majority of us make resolutions every year, less than 8% actually keep them?
This doesn’t have to be the case. There is every reason to make next year your year to accomplish what you set out to do. Here are some tips to help.
Involve Family and Friends
Get your family involved to help you follow through. You can also share your resolution with others, and have someone keep you accountable.
If you decide that you want to set a budget and save a specific amount each month, see if a friend wants to do the same. At the end of each month, check in with one another to make sure you are both on track.
Create A Budget
The centerpiece of a financial resolution is to create a budget for the entire year. This isn’t as daunting as it sounds. Decide with your partner and family members what the big expenses are for next year. Will you need to buy a new car? Take a vacation? Fix the roof or replace the air conditioner? By planning ahead and setting aside money in advance, these expenses don’t hit your pocketbook as hard as they would if there were no plan. A family budget is a great learning opportunity for kids, as well.
Don’t allow mistakes you made in the last 12 months to affect your goals for the coming year. Allow yourself to mentally wipe the slate clean. Use previous stumbling blocks as your new goals for next year.
Perhaps you had trouble with credit card debt, stress at work or gained a few extra pounds. Involve those challenges into your New Year’s plan. Setup a timeline for paying off debt, schedule time to de-stress and get away from the office, meet with a personal trainer or create a fitness plan that will work best for you.
Write it Down
Don’t forget to write down what you want to achieve and place it somewhere you see it each day. If nothing reminds you of your goals, then it becomes much more challenging to attain them.
Finally, talk to your financial professional to make sure your resolutions are consistent with your long-term financial plan. And your financial professional can be a great accountability partner too.