Achieving Your Financial New Year's Resolutions
It is possible to make a financial resolution that you can actually keep.
Did you make a New Year's resolution for 2018? Research suggests there is a 50-50 chance you did if you live in the U.S. Did you resolve to eat better, exercise more, quit smoking or save more money? Again, that puts you in the vast majority of Americans. But perhaps most critically, do you plan to actually accomplish that goal anytime soon? Unfortunately, the stats are not on your side for this one - it's estimated that around 33 percent of all resolutions set at the end of the year fail by the following February , and as many as 80 percent of them are never even completed.
Making a New Year's resolution has probably been the butt of jokes for as long as it's been a tradition. Fortunately for some of us, with some extra planning at the beginning, it's possible to make a resolution that you can actually keep, particularly if your goal is finance related.
Make your financial resolution SMART
Pledging to save more or spend less is obviously a much different endeavor than starting a diet, for example. But both goals share some basic keys to success that you might already be familiar with. Using the SMART system of goal-setting , it's much easier to understand what you want to accomplish and how to make it happen.
Using the acronym, a SMART goal is one that is:
Of all the resolutions set and abandoned every year, most of them probably fail because they are neither specific or realistic. Using the SMART system, you can expand a simple goal into a concrete action plan. For example, let's say you would like to save more money in 2018. Instead of this unclear and nonspecific goal, make it SMART:
- Identify exactly what you want to save money for, like an emergency fund, retirement, college savings or simply a nice vacation.
- Make it something you can measure. Compared to something like weight loss, personal savings are a little easier to track these days thanks to online banking. Still, you need to commit to tracking your progress regularly.
- We would all like to have more money, but the fact is that it takes a lot of time and luck to become a billionaire. Your financial resolution should be achievable based on your income or your ability to reduce spending.
- Relevance may be the most difficult SMART attribute to pin down. The idea is that your goal should be something you truly want to improve in your life for your own benefit, instead of something you feel is expected of you. Of course, money management is a common source of frustration in many people's lives. Use this step to reflect on what the goal will mean for you alone.
- When a goal is time-bound, it ties everything together. Set a specific timeline to save an extra $50 every week, for example, and your resolution suddenly becomes much more measurable, achievable and relevant.
The views and opinions expressed by the presenter are not necessarily the views and opinion of Vectra Bank. Vectra Bank is not affiliated with the presenter or his/her organization, and Vectra Bank does not endorse the presenter nor his/her organization's products or services exclusively. The information presented is presented for general informational purposes only and does not constitute tax, legal, investment or business advice.