I never ask my clients what their financial resolutions are when I talk to them every January.
Instead, my marriage-centered financial planning process focuses on helping couples identify what’s most important to them beyond their money. From there, I help couples set specific financial goals that will enable them to use their money to realize this vision.
If I’ve done my job correctly, a client will know exactly what their priorities and goals are no matter what month of the year it is, and they’ll have a plan in place that focuses on achieving them.
(If that sounds like something that you’d like to experience, I encourage you to schedule a free breakthrough session with me whenever you’re ready!)
In the broadest sense, I understand why New Year’s financial resolutions are appealing to people. Turning the page to a new year and dreaming about who you want to be at the end of the year is a good thing.
The problem is that the way we are taught to approach our resolutions sets us up for failure from the beginning.
Note: If you’d prefer to listen to this article, you can get a podcast version of this post here: Money and Marriage Podcast Episode 146 – How To Set Financial Resolutions That Actually Work.
Why Most New Year’s Resolutions Fail
Over the years, I’ve seen statistics that show that anywhere from 75% – 95% of all New Year’s Resolutions fail by the beginning of February. And the bad news doesn’t stop there – a sizeable number of people who are able to sustain their resolutions into February don’t keep up these new habits until the end of the year.
Aspiring to make improvements to your financial situation is a great goal, but unfortunately, New Year’s financial resolutions are typically an ineffective way of doing so. Why?
Financially, January (and December) tend to be the toughest months of the year.
Coming out of the holiday season, many individuals are stuck with large bills to pay from all of their gift-giving and traveling. If you can relate to this feeling, know that this is 100% normal (although it is preventable!) Starting to make changes in your finances before you’ve paid off your holiday credit card bill can be disheartening.
What’s more demoralizing than starting new financial habits, making some improvements, and then logging into the computer later that month to pay a massive credit card bill? You’re much more likely to stick to a goal if you can see a few “quick wins” early on.
January 1 is just another random date.
If we look at it logistically, there is no difference between January 1 and any other date on the calendar. We often feel more motivated to make changes at the beginning of the year because we feel like we are “supposed” to, but this self-motivation doesn’t last. Once a few days go by, we often lose the motivation brought on by the start of the calendar year, and January 7th feels more like December 7th than January 1st.
If you’re ready to make a change, then make a change! Set a goal and achieve it, regardless of what the date on the calendar shows.
But if you find yourself tempted to set a financial goal because the calendar is resetting from day 365 of the year to day 1, recognize that this alone probably won’t be sufficient to help you make sustained progress. You need a plan of action for the other 364 days to make the change stick
January is a difficult month in general.
In the days and weeks following New Year’s, many people are still coming off of their “holiday high” of time spent celebrating and relaxing. Getting back into work and the stresses of regular life can often decrease motivation for accomplishing goals.
This phenomenon is compounded if you’re in one of the (many) parts of the country that experience the coldest weather and fewest number of hours of daylight in January.
Many people are naturally disinterested in working on their financial goals in the summer because it’s the time to be outside, take time off, and travel. Ironically, it can be hard for people to motivate to make progress in January, for the exact opposite reasons!
How to Make Your Financial Resolutions Stick
While I’m pretty pessimistic about financial resolutions, I want to be clear that I’m very, very much in favor of setting goals around your money.
Financial goal-setting can be an incredibly powerful tool to help you and your spouse make progress.
The problem isn’t with the idea of goal setting; the problem is the way that we go about approaching New Year’s Resolutions.
Here are some strategies to increase the odds of your goals actually sticking.
Understand why you’re looking to make a change and focus on this “why” as much as possible.
Before I get too specific with clients about what their specific goals are and how to achieve them, I like to understand why they’re setting the goals in the first place.
“I want to retire at age 62” is a fine long-term goal to set… but there’s nothing in that goal that gives the individual a strong motivation to achieve it.
On the other hand, the following goal has a really strong reason why the individual is setting it:
“I want to retire at 62 because my grandparents passed away in their early 70s. I saw firsthand how painful it was that they were never to live out their retirement dreams, and I want to minimize the chances that this happens to me.”
As you can imagine, this individual is much more likely to come up with a clear, focused action plan to make this goal a reality because the reason why they’re looking to save for retirement is so powerful.
Set your goals NOW.
I don’t care if you’re reading this article in January or April or September or November. If you’re here because you’re interested in improving your family’s financial situation, the best time to set goals is right now.
The beginning of the year (or month, or week) is an arbitrary start time. The best start time is the time when you feel motivated to make a change.
Don’t overthink it. Put pen to paper and write down a financial goal or two that you can get started on right now.
Even better, go a little deeper and identify the very first step you can take to get started on the road to achieving the goal, and then do it – this week!
Set SHORT deadlines.
The biggest problem with financial resolutions is that a year is way too long a timeframe to focus on. I sometimes encourage people to set New Month’s Resolutions rather than New Year’s Resolutions.
Thinking about your goals in terms of shorter deadlines is a much more effective way to get things done. And don’t be afraid to break your goal into smaller pieces if needed.
Setting short deadlines – no longer than a month – will keep you focused on the task at hand and actually accomplish what you have set out to do. Oftentimes, setting a deadline too far in the future, or not setting one at all, can lead to procrastination and avoidance.
Break down your goal into small, manageable steps (and focus on the first step!)
If part of the process of following through on your big goals is to set short deadlines for completion, it follows that you should also be setting smaller goals that correspond to these smaller deadlines.
By breaking down your big goals into a series of small, sequential goals, you make it much more likely that you’ll achieve the end result.
For example, if your goal is to buy a home, break it down into subgoals: figure out how much you can afford, review credit reports, talk to multiple mortgage lenders to get preapproved, and so on.
By approaching your homeownership goal in this way, you can create a timeline that is actually doable. Not only that, by focusing on one small step at a time, you can make a daunting challenge seem much more manageable. Simply focusing on one small step at a time makes your goal much more realistically achievable and can get you excited about tackling that task.
Even though it seems like it’s contradictory, it actually is possible to accelerate by slowing down. Breaking your big, overarching goals into smaller pieces is a great way to increase the odds that your financial resolutions actually stick.
Focus on one thing at a time.
Or, to put it differently, only try to change one thing at once.
There’s a common pattern among all of these tips on how to make your financial resolutions stick: making it as simple as possible to take small steps, one step at a time.
It’s easy to get overwhelmed if you’re trying to do too many things at once. And if you’re overwhelmed, you’re much less likely to stay engaged in the goal-achieving process.
If you have three different financial goals you’re trying to achieve, you’re much more likely to finish these goals faster if you focus on one at a time than if you were to try to achieve all three at once. Focusing on one goal at a time channels all of your energy in one particular direction in a way that’s much more likely to lead to sustainable results in the long term.
Experiment and adapt to find what works best for you.
If you set a goal or financial resolution and you don’t achieve it, don’t be too hard on yourself.
Instead, take some time to reflect on where things went wrong, pick something to do differently in the future, and give it a shot.
When I first started Pacesetter Planning in November 2016, one of the first things I did was create a 2017 business plan.
This plan was long forgotten by the end of January 2017, for all of the reasons described above.
I then adapted by following my own advice. I started trying to set singular monthly goals for the business. And while that worked fairly well because it gave me clear, short term milestones to focus my work, it sometimes felt like I was steering a boat without a roadmap.
I’d set one short term goal, achieve it, then set a short term goal on a completely different topic the next month. When I looked back at where I had been over the prior six months, I was all over the map.
So, I adapted my goal setting process again. These days, I create 90 day roadmaps for the business and break the roadmap down into three to five goals to get me from point A to point B.
You can – and should – do the same thing when setting goals for yourself. Start by setting shorter-term, specific goals, and then adapt as needed to make the goal setting process work for you.
Make sure your spouse is on board. Or at the absolute bare minimum, make sure that they aren’t working against you.
It should come as no surprise on The Money and Marriage Podcast to hear me suggest that you should be working with your spouse on your goals.
Sometimes, it makes sense to set financial goals with your spouse to make sure that you both are working together to achieve them. This is especially true when it comes to financial resolutions that affect your family’s bottom line.
For other types of goals, it might make sense for you to focus on the goal on your own. (For example, if you set a goal around increasing your income or getting a promotion at work).
It’s really hard to achieve a goal like this if your spouse is working against you. If your plan is to put in longer hours at work over the next few months to achieve a promotion, you probably don’t need me to tell you that your odds of achieving this goal are low if your spouse wants you home by 5:15 PM every day.
You shouldn’t move forward with implementing a game plan for achieving your goals until you and your spouse are both bought in.
Financial Resolution Accountability
The best piece of advice I have for those of you out there struggling to stick to your financial resolutions is to find an accountability partner.
Whether that be a friend, family member, or coworker, having someone else to check in on you consistently and ensure you’re on track is the best way to keep motivated. Remember, while some people have a lot of success keeping up an exercise program on their own, it’s the people who hire personal trainers who see the best results. Part of this has to do with the plan they help you develop, but personal trainers keep you accountable and make sure you’re doing the work week in and week out.
The same is true for finances. One of the biggest things I do for the couples I work with is to hold them accountable to their most important financial intentions. I am here to help guide, support, and keep you on track – and to help you adapt as things change to help you stick to your financial resolutions.
If you would like help refining and setting your goals to start NOW, and getting started on making real changes today, I encourage you to schedule a free breakthrough session with me whenever you’re ready.