Why Financial New Year’s Resolutions Can Be A Waste Of Time

Are you excited to move into the New Year? Let me guess, you feel like ”new year, new me” right? I don’t blame you! I too would get excited about a “fresh start” and make all sorts of financial New Year’s resolutions…but I’m here to tell you that’s a complete waste of time.

Only about 8% of people actually achieve their New Year’s goals according to research by the University of Scranton. However, that doesn’t mean you shouldn’t still try to make a change in your finances. Find out how to make New Year’s goals that you can actually accomplish.

Why Most New Year’s Resolutions Fail

The reason why most people don’t achieve their New Year’s resolutions is because they make a large list or attempt to make an extreme change overnight. This approach is destined to fail because you’re trying to achieve too much or have an overwhelming goal.

Here is what a typical financial New Year’s resolutions list looks like:

1. Create And Stick To A Budget
2. Increase My Net Worth
3. Save At Least 10% Of My Income
4. Have A Fully Funded Emergency Fund
5. Buy A House
6. Develop At Least One Stream Of Passive Income
7. Make More Money Than I Did Last Year
8. Pay Off At Least One Of My Credit Cards
9. Spend Less Money Than I Did Last Year
10. Get Physically Healthy
11. Increase My Credit Score
12. Break Bad Spending Habits
13. Increase or Start Investing

That is 13 things to work on all at once, before you even get to goals in other areas of life. Although this is a nice aspiration, and all of these things are important to improve your finances, it’s just too much to focus on.

By trying to focus on EVERYTHING on your list, you will most certainly feel overwhelmed and then give up.

I’m not trying to tell you not to set any financial New Year’s resolutions because “hey, you’re destined to fail anyway” — but I am trying to show you how to make New Year’s goals that you can actually accomplish.

Setting financial goals is a good thing. You are actually 10 times more likely to have success by setting goals than those who have a desire to change but don’t make a resolution to do it. I’m here to show you how to actually make goals that stick!

How Do You Stick To Your New Year’s Resolution

You can become one of 8% of people who actually achieve their financial New Year’s resolutions if you follow these tips:

1. Keep It Simple

Trying to achieve too much all at once is the number one reason resolutions fall apart. So keep your list short: no more than 3 goals.

You can still make a big overall list, but only choose 1-3 thing(s) you WILL achieve this year. The 1-3 thing(s) should be the most important thing(s) you want to accomplish this year.

If you reach those goals on your short list sooner than you thought, then you can add another goal from your long list.

2. Make It A SMART Goal

When setting your goals, you want to use the acronym SMART. SMART stands for: Specific, Measurable, Achievable, Relevant, and Timely.

SMART:

• You want to make your goals as specific as possible;
• Measurable so that you can track your progress and know when you’ve achieved your goal;
• You want to make your goals realistic and achievable;
• Your goals should be relevant to your overall plans in life; and
• Finally, you want your goal to have a time limit where you set an end date to achieve your goal

By making your goals SMART, you have a higher chance of actually achieving your financial New Year’s resolutions. It makes your goals very clear and lays out an easy to follow plan to reach them.

If you want more details on setting SMART money goals, read How To Set Financial Goals.

It also helps to keep your goals where you will see them every day. Write your one to three goals at the top of a page, list the first small step under each one, and put it on the fridge or in your planner. This financial goals worksheet walks you through it.

3. Believe In Yourself

Believing you can do it matters. It won’t do the work for you, but it decides whether you keep going after a slip. Expect a few hard weeks along the way; one missed savings deposit does not erase the goal.

When a discouraging thought shows up (“I’m just bad with money”), answer it with a true one (“I paid every bill on time this month”). A hopeful, positive attitude changes how you handle setbacks, and handling setbacks well is what carries you to the finish line.

4. Share Your Goals With Others

Sharing your financial New Year’s resolutions with others is a way to build accountability. When you are accountable to someone, or a group of people, you are more motivated to get things done.

You are more motivated because of the power of expectations. If someone expects you to do something, you normally don’t want to disappoint him or her.

You can share your goals with your friends, family, or even on social media. Sharing your resolutions is a good way to hold yourself to them. In addition, you will find that most people will rally around and support you.

This encouragement will also increase your chances of success.

Here is what a short list that works can look like:

A Short List That Works:

1. Build a $1,000 starter emergency fund by June 30.
2. Pay off one credit card in full by December 31.
3. Cook dinner at home five nights a week to cut takeout spending.

That is only three goals, and each one is specific, measurable and has an end date.

What Are Some Good Financial New Year’s Resolutions?

It’s hard to say what a “good” financial New Year’s resolution is because it really depends on your situation. However, here are some examples of financial goals that most people would like to achieve:

1. Create And Stick To A Budget
2. Increase My Net Worth
3. Buy A House
4. Save At Least 10% Of My Income Every Month
5. Have A Fully Funded Emergency Fund
6. Increase My Income
7. Pay Off My Credit Cards
8. Develop Other Streams Of Passive Income
9. Reduce My Expenses
10. Increase My Credit Score
11. Break Bad Spending Habits
12. Increase or Start Investing
13. Start A Business
14. Buy A Car
15. Pay For My (Or My Child’s) Wedding In Cash
16. Save For A Vacation
17. Pay Off My Car
18. Pay For My Child’s Education
19. Retire Comfortably/Financial Freedom
20. Pay Off My House

Again, I can’t stress enough that you should limit your list to no more than 3 goals to increase your chances of actually accomplishing your financial goals. Once you’ve achieved your 3 financial goals, you can add more goals to your list.

Summary

In summary, making a long list of financial New Year’s resolutions is a complete waste of time, and you are setting yourself up for failure.

Instead, focus only on 1-3 things you want to accomplish this year. The key to success is to make your goal simple and S.M.A.R.T. Believe in yourself and keep a positive attitude. Finally, share your goals with others so you are held accountable.

What are your money goals for the new year? Share your financial New Year’s resolutions in the comments.

Happy New Year!

Related Articles:

• Goal Setting Mistakes
• Mini Goals
• How To Set Financial Goals

If you want to remember this article, pin it to your favorite Pinterest board.

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Want a little more help with this? The Goal Planner gives your one to three goals a home, with pages to set each one, break it into steps and track it all year.