How to Beat the Odds and Stick to Your Financial Resolutions
Jan 25, 2023
We’re only a month into 2023, but if you’re like most people, you’ve already given up on your New Year’s resolution. In fact, a whopping 80% of resolutions fail by February.
However, a small set of people—9%—are able to defy the odds and achieve their goals every year. Let’s explore what they do differently and how their tactics can help you stick to your financial resolutions this year.
Make a “SMART” resolution
“SMART” is a proven methodology for making goals you can stick to. It stands for:
- Specific: If a financial goal isn’t specific enough, you can’t hold yourself accountable to it. Instead of resolving to simply “save more money,” try this: “Grow my rainy day fund by limiting takeout to once a month.”
- Measurable: If you don’t quantify your goal, you can’t track your progress. In practice, this means adding structure. Think “grow my Rainy Day Fund by $500,” or “deposit an extra $20 per week into my Rainy Day Fund.”
- Achievable: Your goal should be challenging enough to inspire a change of behavior while remaining within reach. Maybe limiting takeout to once a month will kill your motivation or isn’t realistic with your work schedule. Just scale it back: “Grow my rainy day fund by limiting takeout to 3x per month.”
- Relevant: Define why you’re setting this goal and why now. Maybe you’re sick of roommates and want your own place, or you really want to visit Disney World one day.
- Time bound: Deadlines are critical to success here: “Put an extra $20 into my rainy day fund each week by limiting takeout to 3x per month, which should save me $500 by July.”
Build a budget that actually works
- Declutter your finances.
First, see where you stand. Take a cue from “tidying expert” Marie Kondo by laying it all out. Kondo asks her clients to pile all their clothes in the middle of the room so they can physically examine each item to see if it “sparks joy.” If the answer isn’t a strong “yes,” it goes into the donation pile.
Bring the same level of awareness to your finances. List everything you’ve spent money on over the past month and give each transaction a cold, hard look. How did it serve you? Which things were non-negotiable? Which ones “brought you joy,” and which were not very helpful? Has your gym membership been wishful thinking for a while? It might be time to pause it. Do you remember the meals you ate out? Were they worth it?
- Optimize with digital tools.
Chances are your credit cards and banks have digital tools to help you gain more visibility and control over your spending. For instance, Maspeth Federal Savings customers have MX Personal Finance tools, which help them track purchase categories, create budgets, visualize their goals, and get insights on where and how they spend.
- Make room for an emergency fund.
While it may seem like an extra “to-do” on top of your goal, having a proper emergency fund ensures that unexpected expenses don’t throw you off course.
Make budgeting easy and automatic
Another way to maximize your effort is to automate as much as you can by setting up the following:
- Autopayments on utilities, your cell phone and credit cards
- Direct deposit for your paychecks (“Pay yourself first”)
- Weekly or monthly transfers from your checking into your savings account
- Automatic 401k contributions, if available
Take pride in yourself and trust the process
Taking the time to regularly reflect on your progress is essential. For instance, if you’re trying to save money, get in the habit of looking at how much you have at the end of the month to see if you can throw any extra change at your goal.
If progress seems slow, try not to get frustrated. Things will come up. Other priorities will take center stage from time to time. The simple act of having a SMART goal means you’re in a better position than you were before. Remember: Sticking to a financial resolution isn’t just one thing; it’s the sum of many small moves over time. A step back or two is unavoidable on any journey—as long as you’re facing forward, you can’t fail.
The information herein is general/educational in nature and should not be considered financial advice. Consult a finance professional regarding your specific situation.