Date 19.12.18
Keeping your Money-Related New Year’s Resolutions
This is the time of year where many people make New Year’s resolutions. These promises to yourself can be a good idea. They can help you improve your life, reach your goals, better yourself as a person, and achieve your financial goals. However, one issue is that many people end up breaking their New Year’s resolutions shortly after they make them. This often isn’t due to lack of trying, but it’s frequently because of how resolutions were set and the process followed for keeping these goals.
Here are some tips for setting New Year’s resolutions that you will be able to keep as well as ideas for how you can stick to your plans once you make them.
Make your Goals SMART
Have you heard of setting SMART goals? SMART stands for Specific, Measurable, Attainable, Realistic and Time-Sensitive. Making your resolutions with these concepts in mind can go a long way to helping you keep them.
- Specific
- You’ll have a lot more success if your resolution is to “save an extra $100 each month” than if you resolve to “save more money.” When you set a vague goal, you have no way to tracking your process to see if you’re successful. You could always save “more” money no matter how much you’re currently saving, so you’ll be a lot more likely to get discouraged if this is your goal. Come up with something more specific instead.
- Measurable
- Just like your goal should be specific, it should also be something you can track. For instance, if you want to eat out at restaurants less often, how will you determine if you’re meeting your goal? For instance, a measurable goal is to resolve to only eat out twice each month, for instance. This goal will give you something to track.
- Attainable
- If you currently have no emergency fund, you’re not likely to be able to save $50,000 by the end of the year. Setting a goal that is almost impossible to accomplish isn’t doing you any favours. Instead, choose something more attainable.
- Realistic
- In the same sense, choose something that is realistic for you. If you resolve to pay off your credit card debt in full by June (for example) but you also want to increase your emergency fund by $200 each month, is accomplishing both of those goals at the same time realistic? Or should you try to achieve one before you focus on the second?
- Time-Sensitive
- Giving yourself a deadline is a good idea. Take the above example of paying off your credit card debt by June. This is a much better goal than just saying you want to pay off your credit card debt. Deciding that you want to accomplish this goal by June gives you a deadline and something to strive for.
Break Down Goals into Smaller Tasks
You may decide that your resolution is to put $200 aside each month for emergencies (for instance). However, this may be a goal that you want to work up to. It’s tough to find $200 in your budget all at once. Instead, decide that you want to save an extra $25 in January. Then increase this goal to $50 in February, $75 in March, $100 in April, etc. until you’re putting aside $200 each month.
Breaking down your goals into smaller steps will make it easier to accomplish them
Reward Yourself
If possible, give yourself rewards for achieving your goals. For instance, if you are still on track by the time July comes around, decide that you’re going to go out for a special lunch with your friends. Of course, you’ll have to make sure that you have room in your budget to afford your expense, but giving yourself something to look forward to can help you stay motivated.
Don’t Get Discouraged
One of the main reasons many people drop their New Year’s resolutions is that they see the process as an all or nothing situation. If your goal is to save $100 each month, and you don’t hit this goal in a certain month, you might be tempted to abandon your resolution completely. Don’t do this. Instead, recognize that people make mistakes, and recommit to meeting your goal the next month. Don’t give up!