We all know the drill by now: we make a New Year’s resolution to lose weight, reduce spending, or finally finish that novel – We fail miserably, feel bad about ourselves, then down a tub of double-chocolate ice cream. It is enough to make us give up on making any New Year’s resolutions at all.
Before you put off making New Year’s resolutions forever, please note that studies have shown that making financial New Year’s resolutions does, in fact, help you get your fiscal house in order. Of those who achieved, or almost achieved their resolution this year, 56% said their finances improved. Of those who fell short of their resolutions, only 34% reported better financial circumstances.
Financial resolutions are actually relatively easy to achieve. If you are following a diet or exercise regime, you have to get up every morning and resolve all over again, but with something like an automated RRSP monthly direct deposit, you need only set it up once at the beginning of the year and then it becomes part of your lifestyle.
The top three financial resolutions are: save more, spend less and pay off debt. The underlying concerns that drive those financial resolutions are unexpected expenses, the economy and having enough money for retirement.
Financial pledges will not mean a thing if you do not have a firm strategy in place. So how do you go from resolution to achieving your goal? It comes down to forming an action plan.
If it’s a few seconds to midnight on New Year’s Eve and you are just coming up with a resolution then chances are high that you will fail. To achieve your goals requires preparation. You have to be serious about the endeavour.
Deliberately design your life so that you are more likely to succeed – do not rely on willpower alone. Make realistic and attainable goals – then publicly declare them so that others will encourage and help you along the way. Make sure you reward yourself for your achievements.
Track your progress. Avoid environments which will cause you to fail (for example – if you are trying to lose weight, don’t walk past your favourite dessert place). Allow yourself the occasional slip but have a strategy in place to get you back on track.
After about three months, your new routine will kick in and your behaviour will adjust accordingly. Resolutions are difficult to keep at the best of times so hopefully building in a financial motive will pave the way to your success.