If you made a financial resolution last year and failed to stick to it, you’re not alone. Whether you wanted to get out of credit card debt, pay off student loans, save an emergency fund or save more for retirement, you might be looking back and wondering what happened.
Here are some factors that help determine whether you are successful at sticking to your goals (and some tips to ensure that you achieve them in 2016).
1. You Weren’t Specific Enough
One of the common downfalls is not being clear on exactly what you want to accomplish. The more specific your resolutions, the more likely you are to stick to them. For example, if one of your 2015 resolutions was to save money for your retirement, you should have known how much you wanted to save, what account you wanted to save it in and whether your employer offered matching funds to help.
An example of a good resolution might be to plan on saving $10,000 towards your retirement by maxing out the $5,000 matching funds that your employer offers towards your 401(k). When you phrase your resolution this way and get specific, it’s clear what you’re going to do and how you’re going to do it.
2. You Didn’t Have a Plan
A good plan is key if you want to stick to your goals. If you don’t know what is involved in the journey and what you need to do at each step, then you’ll be more likely to get frustrated, procrastinate and give up.
For 2016, be sure to create a plan. For example, let’s say you want to contribute $5,000 towards your 401(k) so that your employer will match it. The first thing you need to do is learn the details about the 401(k) matching, choose a 401(k) option, figure out who administers the program and sign up for it. Since $5,000 over 12 months works out to $416.66, you’ll need to make sure that you can afford to put that much money towards your goal every month and still make ends meet. You might have to rejigger your budget, take on additional work, ask for a raise or put off a vacation. Having everything planned out at the beginning of the year with key timelines and deliverables will allow you to check on your progress and keep on track throughout the year.
3. You Took on Too Much
We all know about what happens to people who make unreasonable fitness or weight loss goals. Many start off in January by going to the gym five to six times a week only to drop off in their frequency and stop going after a few months. The reason they don’t stick to their fitness resolution is that they tried to do too much too soon.
Lifestyle changes don’t happen overnight. People often think that if a little of something is good, then a lot of it is even better. But that might not be the case. People who have long-term habits of doing things like working out or making good financial decisions often started with small choices that built on each other over time. It can be hard to change your bad habits, but by replacing them slowly with good ones, you’ll see the benefits of the changes rather than just feel the sacrifices. For example, if you want to cut back on your spending to save money, rather than wear yourself out by trying to eliminate all excessive spending the first month, it might make sense to set a more conservative savings goal the first month and find ways to gradually cut back every month after that.
4. You Didn’t Celebrate Small Milestones
Anyone who has ever tried to repay a significant amount of debt knows that debt fatigue is a real thing. Sure, you might start out excited to rid yourself of the debt that is weighing you down, but after a while you’ll tire of constantly having to forgo things you like. It’s key for anyone trying to achieve a financial goal to build in moments of celebration during the long slog. If you didn’t do that in 2015, be sure to make celebration a key part of your 2016 financial resolution.
If you’re trying to pay off $20,000 in debt, you might want to do something to celebrate every time you pay off $2,000, $4,000 or $5,000. You can choose to do something that doesn’t cost money like cooking a special dinner or going out to a free festival, or you can give yourself a small amount of money to splurge on something fun. While $50 or $100 won’t make a big difference in the long run, it will have an effect on your psychological motivation by giving you the energy you need to keep working at your financial goal. Be sure to also plan a big celebration for when you’re debt-free.
5. You Relied Too Heavily on Willpower
Let’s say that you decide to go on a diet and stop eating cake. To accomplish this goal, you might decide never to buy cake or have it in your house. Or you can buy cake for the rest of the family to eat and decide that you’ll just use your willpower to abstain. Which choice will be more effective? Definitely the former.
It seems so obvious when you look at it that way, doesn’t it? We only have so much willpower each day. Once we use it up, we don’t have any more to go around, and we’re liable to slip up and make a mistake. We’ll eat the cake or splurge on something we can’t afford. If you are trying not to spend money, then you might want to keep temptations to spend as far away as possible. Don’t go to the mall or browse online. Better yet, get a free app that will block ads online. You might also want to start using only use cash or leaving your credit card at home. If you go out with friends and worry you’ll spend too much, just bring what you budgeted for the evening. You might also decide to automatically transfer money to your savings account, or your retirement account so that the money doesn’t sit in your checking account where it’s easy to access.
Find ways to decrease the temptations you encounter, and you’ll be more likely to stick to your financial goals.
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