I don’t think any of us plan to work at our New Year’s resolutions for just a few months before giving up, but that’s exactly what many of us end up doing. Changing a habit is hard, and resolutions require that.
Here are three characteristics of successful resolutions. The examples deal with saving money, but this advice can apply to other financial goals or goals about fitness, being more conscientious, keeping in touch with friends and family, and other aspects of our lives.
It’s not enough to say, “I want to save more money.” How much do you want to save, why and by when? Once you’ve begun saving, review your progress occasionally to see if you need to increase your effort.
I recommend monthly goals, which give you 12 opportunities to make progress toward a bigger annual goal. If you want to save $1,200 more this year than you did last year, break it down into an extra $100 per month. If you don’t meet the goal one month, spread the difference over the remaining months.
Set a goal you think you can reach, understanding that your kids will still want to play soccer, you’ll still need to eat and you’ll still have to maintain your car and home. That makes saving $1 million in a year an unrealistic goal for most of us. But saving even $25 per month, especially if you haven’t been putting any money away, will help you build the habit.
If you’re increasing the amount you save each month, make sure it’s not going to hurt you financially. It should feel uncomfortable, but it shouldn’t affect your ability to meet your basic needs — not your “wants,” which are a very different thing.
Why do you want to save more? Are you really concerned about retirement, or have you dreamed of spending two weeks on vacation without worrying about how you’re going to pay for it? There’s no right or wrong reason to save money, but you need a goal you think is important, not one that everybody else is talking about or recommends. This gives you a reason to continue working when — not if — it gets difficult.
I want to be clear: Just about all of us will need to have some type of financially independent retirement, either because we don’t want to or simply cannot work any longer. You do need to save for this eventuality, and the sooner you start, the more opportunities for success you create.
Setting a good goal is important, but so is your follow-through. Find someone to help keep you focused. That could be a friend or family member, as long as you’re sure that person will push you when you need it.
If you’re hiring a planner, make sure that person will check in with you throughout the year. Paying somebody to hold you accountable for a goal gives you more skin in the game. If you hire somebody, you’ll make sure you get your money’s worth.
Consider everything you want to accomplish during the next year. There are 52 weeks, so you should be able to do all kinds of things, right? Wrong! Each of us has only so much capacity. But setting specific, realistic goals makes this easier. Start small, and remember the “why” when things get difficult.
And perhaps most importantly, don’t forget to celebrate the victory when you reach the goal.