This year, create financial habits NOT resolutions
In the new year, it is common to see people creating their “New Year’s Resolutions” list. For many, this includes some sort of financial resolution and it typically doesn’t last. If you are someone that typically creates a resolution at the beginning of the year but fails to commit, you’re not alone. In fact, there is even a designated day called National Quitters Day. The second Friday of every year is the day that most people give up on their resolutions. Did you make it?
If you did, congrats! That’s a great start to making changes in your life. If you didn’t, well join the club. Either way, to be successful in sticking with your resolutions or starting over after quitting, you might need to reframe your goals. Create financial habits, not resolutions! The key to achieving any goal is to create habits that support it. Without creating these habits (whether small or large) you will find it difficult to accomplish your goal. Check out these tips below to set yourself up for success.
First things first. Is your goal actually achievable?
The best way to make sure your goal is achievable is to make it specific and measurable. If you want to ‘save more money’ try to reframe it as ‘save $200 per month for the entire year’. If your goal is to ‘build your credit’ try reframing it as ‘pay bills every month on this date’ or ‘reduce credit card debt by paying this amount per pay period’ (check out how to build your credit here). To make it even more specific make it cue-based. For example, after work on Mondays put $20 in to your savings account. Making your goal specific and cue-based makes it easier for you to work backwards and figure out how to achieve it.
Try to piggy back off of current habits
The easiest way to create a habit to support your goal is to work off of a habit that you already have. For a financial goal this could be every time you look at your bank account, move $10 into savings. You already have the habit of checking your account, now just add the habit of moving some money to your savings.
You can also piggy back off of non-related habits. Take something like watching your favorite show or going out to eat. Then, add the habit of putting money into your savings or paying a bill before you are allowed to do that.
Control your environment
Set yourself up to follow through on your new habits. Use your calendar reminders on your phone, set out post-it notes, put you unpaid bill on your desk, create a to-do chart, or anything that will visually remind you to do these habits. You can also try to make your habit as easy as possible for you to complete. For instance, downloading your financial institution’s mobile app (download ours here), setting up automatic withdrawals, or whatever will make your life easier.
Track your progress and remember it won’t be perfect
Make sure to track and look at how far you’ve come! It is an easy way to feel a sense of pride and purpose when you see that credit card debt going down or your savings account going up.
Remember that even if you have been crushing it for the first three months, there is bound to be that one month where you forget or your plans fall through. That does not and excuse to give up completely. You are working on long term goals and habits that take time and effort. We are not perfect and all you can do is own it and get back to it ASAP.
Now get to it!
As soon as you figure out your goal, do some research to figure out how to make it specific and create habits that will help you achieve them. It may take some trial and error but it will all be worth it in the long run.