It’s already February and we are two months into 2014. Did you come up with a New Year’s resolution before the year started? We all wanted to start the year with strong personal finances or healthier habits. How was it? Do you think that you are still on track with any of the financial resolutions that you set before?
An article published on Time.com discussed how a New Year’s resolution is actually not helpful. The article said that if you come up with a resolution but you never make a plan to make it successful, you are in danger of making everything worse. For instance, if you want to cut back on your spending and you do it without a plan, you will only be driven by the enthusiasm that comes with a New Year. You will be depriving yourself and when the initial enthusiasm dies down, the will to complete it also dies with it. When that happens, you usually spend more than what is necessary to compensate for the feeling of deprivation. You end up being in a worse situation than when you started.
But despite that observation, you know that any positive change that you want to happen in your life usually starts with a resolution. If you really want to revolutionize your money, you have to start with a financial resolution. The problem is not with the actual resolution but with how you will follow through with it.
Resolutions about money rank 3rd in the top 10 list for 2014
According to the data from StatisticBrain.com, 45% of Americans come up with a New Year’s resolution. In 2014, the financial resolution to spend less and save more ranked as the third highest. The first two is losing weight and being more organized.
The statistic also mentioned how 24% usually do not complete their resolution. They usually fail and almost never succeed in their commitments. This is a sad statistic that shows us how poor our discipline and self control really is. But even as the resolutions are not succeeding, it is still a fact that those who create these commitments are 10x more likely to reach their goals. At least, compared to those who never make resolutions.
According to an article on HuffingtonPost.com, the personal saving statistic in 2013 is only 4.5% of an individual’s disposable income. While the article mentioned that this is an improvement from the 2.6% in 2007, it is still a small amount. People should increase that amount so they can get a better chance at improving their financial standing.
So what does all of this mean? Here are four assumptions that we have gathered from this statistic.
People want to change. Obviously, there is a willingness to change. A lot of consumers are taking the right first step by creating resolutions that will help them improve their lives. They know the changes that has to happen as evidence by the specific financial resolution stated in the Statistic Brain site.
Consumers lack the discipline and will to fulfill their financial resolution. The low success rate means that consumers lack the willpower and the discipline to finish what they started. It can be a lack of motivation or simply the lack of a proper plan to reach the goal.
Debts are under control. Although the consumer debt continues to rise, this is a notable absence in the top ten list of resolutions. This can only mean two things. The consumers have their debts under control or they are prioritizing the growth of their personal net worth.
Americans are not saving enough. Lastly, the statistics we just saw means that Americans are not saving enough. 4.5% of the disposable income is quite small. Consumers have to start making an effort to grow their savings if they really want to improve their finances.
What to do when you are not sticking to your money resolutions?
Creating a financial resolution or resolutions will really help you get the changes going for you. If you have done that at the start of the year and you think that you are faltering already, you may want to take a look at our suggestions to get you back on track. We have three questions that we want you to ask yourself.
Did you make SMART financial resolutions? SMART stands for specific, measurable, assignable, realistic and time-related. If your goals do not satisfy these, then you know that you have to change it. An example of a wrong resolution is to simply say that you want to save more than $2,000 by the end of 2014. There is no plan in place to tell you how you will reach your goal. The right way to do it is to be more specific and detailed. For instance, if you want to increase your savings, you have to ensure that is satisfies the SMART qualifications. Your goal should be to increase your savings by strictly putting aside $50 every week into your account. You will brown bag your lunch to work so you can reach this goal. This way, you can save up $2,400 by the end of the year. That is how you make your financial resolution SMART.
What habits do you have to develop to reach your goal? There are many habits that will make you a financial failure and there are those that will help you succeed. In our example, we mentioned how we want to increase your savings. The habit that you need to develop is to brown bag your lunch to work. That will help save you a significant amount of money. Concentrate on developing other habits like putting all the change in your pocket at the end of the day on a piggy bank. Any coin that you have in your pocket will have to be deposited in your piggy bank – no excuses. Concentrating on changing your habits will make the financial resolution more permanent.
Do you feel a sense of accountability? Some people focus on the reward if they succeed in making the financial resolution a reality. But we all know that is not enough to motivate people to complete what they started. So how about this: set up a punishment of some kind that will be imposed if you fail your resolution? Actually, it does not even have to be an actual punishment. Just let other people know about your resolution so you will feel embarrassed if you failed. For instance, get out of debt bloggers tell the world of their endeavor and the motivation came from the support of their readers and the audience that is waiting for the blogger to succeed or fail.
Think about all of these as you review your financial resolution. Setting it up is one thing. You have to make sure that you will succeed. That simply requires you to plan your next steps so you can identify the tools and the habits that need to be developed so you can reach your goal. That is really all that you need: a plan and the discipline to stick to it.
Since you will be going through the effort anyway, it pays to keep yourself from wasting it. Also, these resolutions are all for your own good. The sense of personal satisfaction is unparalleled if you finally achieve what you set out to accomplish.