Many New Year’s resolutions focus on being smarter with money. However, studies show that 20% of Americans keep to their resolutions past February and only 8% make it all year. It has also been said by Clinical Psychologist Joseph J. Luciani, Ph. D, that most resolutions fail due to sabotage caused by a lack of self-discipline. Based on these findings, we’ve compiled five practical tips to help ensure you stay committed to your resolutions for a strong financial future and build self-discipline.
1. Define your resolution. Make your resolution realistic and specific. For example, making a resolution to pay off debt or save money can leave a lot open for interpretation and is not specific enough to keep you motivated. However to pay off a $2500 credit card by March or save $3000 in your emergency fund by July is a way to define your resolution with the potential for success.
2. Create your action plan. If you keep doing what you’ve always done, you’ll get what you’ve always gotten. Let the achievement of this year’s financial resolution be different. For example, if your resolution is to save $3000 for your emergency fund by July, you could start by creating and implementing a budget and then tracking your spending. By creating this action plan you are better able to measure how much money you can save each month. You can clearly see if your actions will lead you to the goal. Being able to check the progress of achieving your resolution is essential to staying motivated and committed.
3. Discover the reasons for your resolution. This is essential to staying disciplined. This is because your resolution will often include changing a behavior or taking a new action. When times get tough or an unexpected event occurs, it’s easy to revert to old habits. If the resolution of saving $3000 is to feel secure to be able to handle unexpected events, then this reasoning will help you to stay motivated. Discovering the “why” behind your resolution is a key to stay disciplined on your action plan.
4. Be determined and disciplined. Once you decide to take action, momentum sets in, and it feels good. Inevitably, life happens, and unexpected events occur. A medical emergency happens, your car needs new tires, the washing machine quits. This will test your discipline and it can leave you feeling defeated. We’ve all been there. This is where discipline and determination come in. You must remember the reasons for your resolutions and not stop moving forward. When you stay committed and disciplined during these unforeseen financial events, new behaviors and habits are strengthened and you are well on your way to achieving your goal.
5. Practice forgiveness. Often, past money experiences and thoughts around money get in the way of achieving your financial resolutions. It may not seem obvious, but the act of forgiveness can help you get back on track. In order to forgive either yourself or partner, you have to acknowledge the situation and the pain caused by the experience. For example, your partner spent too much at Costco, depleting your food budget prematurely. The emotions you may be experiencing can lead to you derailing the whole plan. Forgiveness is realizing this can be seen as an isolated event. If we can truly forgive, then we can be healed and move forward, living in the present and taking action towards our goals.
These five tips provide a practical guide to achieve your resolutions and be part of the 20% of Americans who keep them. Your successes this year and subsequent years will help propel you towards accomplishing your long-term financial plan. Why not get started today?