The holidays have come and gone and we've rolled right into a brand new year. Welcome to 2016!
If you're anything like me, your tree is still up (albeit dead) but your list of New Year's Resolutions is already swirling around in your head. It can be hard to decide what to focus on in a new year and where to begin. One thing to remember is that a new year doesn't mean you should attempt to make extensive personality changes. The new year is an opportunity to reflect on the past year and think of some positive changes you can make to have an even better year.
As you plan these resolutions be sure to include some financial goals. In fact, setting financial resolutions can have a significant impact on financial well-being. A 2014 study by Fidelty found 51% of those who made financial resolutions say they now feel better off financially compared to just 38% of those who didn't.
We're kicking off a week of financial New Year's resolutions designed to help you map out your financial year and learn how to make simple changes that can have great impact on your financial well-being and your attitude toward your money. To help you get started we've put together a Financial New Year's Resolution Worksheet to walk you through determining resolutions that are both realistic and attainable.
Here are 6 ways to make sure you stick to your resolutions
- Make sure your resolutions are S.M.A.R.T. SMART stands for specific, measurable, achievable, realistic, and time-bound. In other words, set goals that are clearly defined as well as realistic. Write them down and make a plan. An example of a SMART goal would be, "By February 1st, I am going to start putting $100 per paycheck into my vacation account." More SMART examples can be found on the resolutions worksheet.
- Make one change at a time Trying to tackle too many resolutions at once is a sure-fire way to make sure you don't succeed at any of them. Avoid analysis paralysis by only biting off as much as you can chew. After all, they're New YEAR's resolutions, not new day; you've got a whole year to make changes so do it right. Specifically with financial resolutions we recommend doing them in a specific order and not trying to do them all at once. Use the worksheet to understand the order of priority for your resolutions.
- Break it up Many resolutions can feel overwhelming when looked at in sum. For example, save $3,000 for a family vacation is pretty big. But what if you just resolved to cut out your daily Starbucks and bring your lunch to work every day in January? If you resolve month by month to make minor adjustments that support your overall goal it beings to feel more attainable.
- Automate The beauty of financial New Year's resolutions is that many of them can be automated. Looking at that same $3,000 goal from #3, you can determine how much per pay check you need to withhold and having it automatically deposited into a savings account. Same goes for your 401(k) investment. If you have a resolution to save more for retirement, changing your contribution to meet your company matching is a one and done kind of move!
- Understand (and accept) trade-offs More than likely your resolutions are going to come with some kind of trade-off. Think about what those might be ahead of time and make sure you're willing to accept them. If you're planning to increase your monthly payments on your student loans what will you be willing to sacrifice in order to do that?
- Ask for support We always talk about finding an accountability partner when you're trying to make changes in your financial habits. This is someone who will keep tabs on you and help you stick to your goals. It can also be helpful to get your goals set up in a tool like Wela where you can visualize them and they can be automatically tracked. You'll get a weekly email showing you how your goals are progressing.
Check back all week for more financial New Year's resolutions. We'll be covering everything from how to get your finances organized to resolutions for debt destruction and retirement saving.