Financial resolutions have come to be synonymous with the new year. Similar to thanksgiving and turkey, one is not the same without the other. Even before the year starts, people are already drafting a list of things they want to change or reach for in the new year. As the year starts, these resolutions form part of the new and better you.
One of the reasons why people put together these resolutions especially for their finances is because of debt. Debt can pull you down and it will make you see your finances in a different light enough to make you plan for better financial management. This is why at the start of the year, a lot of people, including you put together a financial list of things that needs to change.
The sad reality in all this is that not all people succeed in reaching their goals. Money.CNN.com explained that there are only about 8% of consumers who gets to stick to their financial resolutions. That is a very small percentage of the population. However, the good news in this figure is that it is doable.
Here are a few things you need to keep in mind when dealing with a financial list as your new year’s resolution.
Use the SMART principle
In goal setting, there are some people who would tell you it is a good idea to aim really high. If you aim for the moon and the stars and fail, you at least land on the roof. That is better that falling flat on your face on the ground. This makes sense for some people but you need to be wary. This can backfire on you as well.
As you aim too high, you run the risk of stretching yourself out too thin. This can leave you burned out at the beginning. One way to prevent this is to be smart with your financial resolutions. More than just being clever, smart is actually an acronym. It stands for specific, measurable, attainable, relevant, and time-specific.
It is important that your goals are specific so you do not veer away from your original target. They need to be measurable so you can check your progress and attain them. They need to be relevant as well to give you purpose. Finally, your goals have to be time-specific to give you a sense of urgency in achieving them.
Include them in your routine
Your financial resolution would not do you any good if your list just stays on your computer, smartphone or on a piece of paper. It is important that you include and integrate them in your routine as early as possible. The sooner you start with it, the better you get used to having them in your routine.
The same principle applies when you are trying to build up good credit. Good financial practices need to be, well, practiced. Just knowing them without ever doing them is like a good book on the shelf, you know it’s there but you do not reach out to read them. The same with your financial resolutions – integrate them into your daily routine as soon as possible.
Keep at it
Once you start including your financial resolution in your routine, it is so tempting to stop. The more challenging it becomes, the greater your desire will be to revert back to your old self. However, the idea is to create a habit out of it to help you be a better version of yourself compared to your last year’s financial standing.
PsychologyToday.com explains how challenging it is to create new habits. However, once you are successful, it could be hard to break. So how do you go from trying to start a new habit to actually getting it into your system? The answer is repetition. Repeating the same thing over and over again rewires your behavioral pattern and helps you develop and maintain new habits
Plan to fail
Your financial resolutions look very good on paper and execution is dependent on the effort that you put in. What happens if you do not succeed? Do you have contingency plans in case one item in your list does not seem to materialize? Does your backup plan lead you back to the same goal or do you have something better in place?
At this point, you already know that we all live in an imperfect world and things can and usually go wrong. With this, you need to plan around it and have contingency measures in with your financial resolutions. Plan to succeed but be prepared to fail. Do not be too hard on yourself if you fall short of your goals. Pick yourself up and do better next time.
Don’t be too rigid with financial resolutions
Try not to create a very rigid resolution list because you would not have enough room to make adjustments. You need some wiggle room especially at the initial stages of your journey as you try to adjust to the new routine. You might encounter some resistance at the start and fall behind with your goals. Some allowance could help you refocus get back on track.
Look for ways to be accountable
If you keep the list to yourself, you are accountable to no one but yourself. You can easily convince yourself that you can get started tomorrow or the day after that. This is no way to manage long term goals that are directly connected with your financial resolutions.
One thing you can do is to share your list with a trusted person. He or she can be a family member, a close relative or even a dear friend. The idea is that when someone else knows about your plans, you somehow feel more accountable. This can push you more into accomplishing your financial resolutions.
Monitor, evaluate, adjust
This three-pronged approach aims to keep your list relevant with the changes in your life. You need to constantly keep up with the changes that are happening around you. With this, your resolutions for the new year can also benefit from your being proactive. It is important to keep a watchful eye out for changes in your life.
As you take note of these changes, you need to evaluate as well how this affects your targets and financial goals. You then have to make the necessary adjustments to help keep your list relevant. CNN.com shared that the Federal Reserve recently increased the interest rate by 0.25%. As you evaluate the impact it has on your targets, you need to make the necessary adjustments so you do not lose money over inflation.
Don’t take life too seriously
You should not beat yourself up too bad when you miss a target or a goal. Life is meant to be enjoyed. If you are too focused on the goal, you might miss out the journey. Take those race horses on the track for example. They are some of the most majestic creatures on the planet. However, they have blinders that cover their eyes and keeps them focused on what is ahead.
Same with life, you need to be focused but you need to enjoy the journey as well. If you just keep your eyes on what is ahead, you miss out on all the things that are happening around you. It can be family relationships or the chance to meet new people. This could make you lose potential life connections that can even help you accomplish your goals a little easier.
It is tough to try and stick to your financial resolutions. There are a lot of temptations and challenges along the way that it is tempting to just drop them. You just have to remember why you started in the first place and make a habit out of it.