How to Stick With Your Financial New Year’s Resolutions
- Sticking with your New Year goals can be challenging, but there are ways to keep yourself on the right track.
- It’s important to choose a New Year's resolution that aligns with your priorities.
- Small goals can lead to big wins. After all, progress is more important than perfection.
There is no doubt that 2021 and 2020 were financially challenging years for some due to the COVID-19 pandemic. Financial hardships ranged from lost jobs, unstable incomes, and changing benefits. There is nothing to be ashamed about when you simply want financial stability. To reach a certain level of financial stability, some people are setting financial New Year’s resolutions.
2022 is all about setting goals that you can actually achieve. After all, progress is more important than perfection. So, take time to create meaningful goals and healthy financial habits that will lead you to you having a successful year.
Planning Your New Year Goals
The first step to sticking with a financial New Year’s resolution is planning one. With so many things to think about, from saving money, paying off debt, investing, and earning more income, it can be really hard to choose just one financial goal.
Choosing a New Year's resolution that aligns with your priorities is important. These priority-specific goals will help you to make wise financial decisions that will lead you into feeling great about your goals by the end of the year.
Recommended Read: Three Ways to Improve Your Relationship with Money in 2022
Set Your Priorities
Setting your financial priorities can seem like a daunting task, but it’s worth it if you want to achieve your goals. Your goals are in your hands, and it’s up to you to take charge. With that being said, there are some guidelines that you must adhere to when it comes to setting your financial priorities.
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Financial rules that will help to align your goals:
- Spend less than you earn.
- Security comes before returns.
- Stay within your risk tolerance.
Spend less than you earn
If you are spending more than you bring in, that needs to change first. How can that change? Tracking your spending will give you an idea of where your money is going. From there, you can decide what to cut back on to keep your spending in check.
Security comes before returns
Once your spending is in check, you can move on to financial security like building an emergency fund and paying down debt. An emergency fund helps you build financial security if an emergency pops up, like losing your job or your car breaking down. Financial security helps you have stability without worrying about sacrificing your financial health and future.
Stay within your risk tolerance
If you’re secure with an emergency fund and you are paying down debts (or paid off your debt), then actively searching for returns makes sense. But that doesn’t mean you should bet it all on cryptocurrency.
Find out how much risk you can handle and invest from there. If you are just starting your investing journey, making a goal around how much to invest within your risk tolerance would be a worthy New Year’s resolution.
Recommended Read: 3 Tips To Change Your Money Habits This New Year
Sticking With Your Financial New Year’s Resolution
Of course, planning a New Year’s resolution and sticking with it are two entirely different things. So once you have an idea for a resolution, follow these five steps to stick with it.
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Choose Motivating Goals
Your goals have to be motivating, or you’re not going to do them. To be motivating, you need to have a reason why you want to achieve this goal.
What is your “why”? Maybe your goal is to get out of debt or to have more money each month. Knowing your “why” can motivate you to attain your goals.
It’s not enough to say you want to “get out of debt.” If you have $100,000 in debt, it is unrealistic. But, paying off one student loan of $12,000 is realistic. To stick with a financial goal you need to be able to do it in a year.
Small Wins Matter
Once you have a New Year’s resolution for the year, break it down into monthly goals. With that $12,000 in student loans, you could make a goal to pay $1,000 a month. Every month that you contribute $1,000 is a win. Little wins are important to keep us motivated.
Aim For Progress, Not Perfection
Too often, we think of a New Year’s resolution as all or nothing. “I’m going to go to the gym every week this year.” Then you get sick in February, you miss a week, and you find yourself waiting until next year to get back in the gym.
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Goals take time to achieve, so don't be discouraged if you have a hiccup in your plan. Instead of aiming for perfection, aim for progress.
If you want to pay $1,000 a month towards your debts, but you can only start with $500, that is okay. Start there. $500 is better than nothing.
The biggest thing is staying consistent and building your money habits over time. To stick with a financial goal, you need to be content with the progress and not perfection.
Celebrate Successes, Move Past Failures
There is always the chance that you can fail. In fact, everyone does. But, moving past those failures to keep trying is what will ensure you ultimately succeed.
To help you move past failures, it is important to keep your “eye on the prize.” But sometimes that prize can feel a long way off.
To keep the prize closer, consider having celebrations along the way. The way you celebrate is up to you, but choosing to enjoy milestones will make the journey more fun. To stick with a financial goal, you need to celebrate your successes along the way.
Update Your Goals Often
A lesser-known phrase is “goals are meant to be broken” (okay, I made it up, but it’s true). Your goals can always change, so don’t be afraid to adjust your goals when you need to.
In fact, set a time to adjust them. Once a quarter or so, it is important to revisit your goals to decide if they even fit your current situation.
There are so many reasons your priorities can change, so make sure your goals change with them. Sticking with a financial goal is not about doggedly holding onto a flippant goal you made in January, but genuine self-improvement.
What are your financial goals for this year? Share your thoughts with us in the comment section below.
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