The new year is getting close. In the next month or so, many of us are going to be considering a resolution or two to start off 2011 a little better than we’re ending 2010. Most resolutions revolve around three topics: improving your health, improving your happiness and improving your finances. It’s very easy to make resolutions about money, but keeping those resolutions can be just as difficult as trying out a new diet. There are some ways to make the process a little easier.
1. Make Your Resolution As Automatic As Possible
The more you have to think about keeping your resolutions, the more opportunities there are to trip up. If you can make them automatic, it’s much easier to keep up with those resolutions. Luckily, with many financial resolutions there are tools that make automation a simple matter. For example, you can create an automatic transfer from your checking account to your savings account if you want to save money over the course of the year for a certain goal. All you have to do then is check in with your bank account regularly to make sure that you won’t overdraft.
Take a look at your goals before you jump into the new year and see where you can make the process automatic and painless. Whether you can make the whole thing automatic will depend on your resolution (and possibly on your financial habits), but if you can only make part of caring out your resolution automatic, it will still help you keep to your goals.
2. Double Check for Realistic Goals
A common issue with resolutions is that it’s easy to set a big goal — but much harder to actually reach those goals. Run the numbers on what you want to do. It’s okay if you will have to stretch — a resolution that’s easy to keep isn’t much of a resolution — but you should be able to actually meet your goal. If even stretching isn’t going to even get you within reaching distance of your goal, scaling down a little makes sense.
You may have goals that you can reach in a couple of ways. If you’re setting aside money, for instance, you can reduce your spending or earn more money. Take those alternative options into account when checking if your resolutions will be attainable. After all, your impossible resolution may be very doable once you combine all the options available to you.
3. Break Down Daily Expectations
Especially if your resolution is going to require a stretch, breaking down exactly what you need to do every day can be a big help. What’s the minimum you need to do daily to reach your goal? Is there a certain amount of money you have to save every 24 hours in order to meet the final total? Writing that down and putting it somewhere you’ll see every day can help keep you on track.
Most big resolutions fail because it’s not just enough to say ‘I’m going to build up an emergency fund of $5,000.’ You have to have a path to get to that end result — and for something that big, that means chipping away at it a little each day.
4. Have an End Point, If You Can
Open-ended resolutions are tough to fulfill. Telling yourself you’re going to cut your spending to a certain point indefinitely means that there’s no relief in sight. It’s much easier to hold out and complete a project when you can see the end — telling yourself that success is only a tiny bit farther away is a great motivator. There’s a similar concern with diets. Many people make resolutions regarding their diets but don’t offer themselves an end point or a relief valve. After doing something unenjoyable, like sticking to a diet, for weeks at a time, you may need a break, even if it’s just a little one.
Give yourself something to look forward to, and it doesn’t even have to be a direct reward. Your feelings of accomplishment may be enough, but if you don’t have a way of knowing that you’ve reached your goal, it can be tough to feel like you accomplished anything. You need an end point to your resolution to be able to know if you stuck to it.
5. Start Your Resolution Today
When you think about it, the first of January is an arbitrary date to make a change in your life. If you’re thinking about your resolutions for the new year now, you might as well start them immediately. At the very least, you’ll have some time to figure out what’s working and what’s not with the strategies you use to transform that resolution to reality. At the best, you can avoid one of the biggest problems with the entire concept of a new year’s resolution. Think about how a resolution for a new diet works: the resolution gets made at the end of a month filled with parties, eating poorly and generally bad habits. Breaking out of those bad habits after spending a month reinforcing them is incredibly difficult, setting many people up for failure.
Many of us face similar problems with financial resolutions. If you give gifts in December, the odds are good that you’ve screwed up your budget a bit at some point or otherwise engaged in some poor financial behavior. That makes starting a new resolution that much harder in January. If you can get your resolution started now and keep it through December, your resolution might become a habit and the beginning of the new year hasn’t even arrived yet.