5 Easy Steps to Help You Crush Your Financial New Year’s Resolutions
By: Erin King
Tags: New Years Resolutions, Save Money, Financial Goals

In 2020, 67% of Americans made New Year’s resolutions to save money and improve their finances.

But only 25% of New Year’s resolutions are still active by the end of the first week of January.

And only 8% of New Year’s resolutions make it to the end of the year.

Why are we so likely to fail our New Year’s resolutions?

Let’s dig into strategies for making SMART New Year’s resolutions, and then write some achievable resolutions for the new year!

How Can I Make My New Year’s Resolutions SMART?

Have you ever heard of the SMART strategy for goal setting?

If you haven’t, don’t worry! The SMART strategy is just an acronym that identifies 5 steps that make the likelihood of achieving a goal much higher.

Instead of saying “I’m going to save money this year,” SMART goal setting helps you set solid goals and resolutions that are actually achievable.

Are you ready? Grab a piece of paper, open Notepad, or start up a note on your phone, and let’s jump in!

The first step of SMART goal setting is to ask yourself “Is my goal specific?”

If your New Year’s resolution is “I’m going to save money this year,” then unfortunately the answer is “no.”

Instead, focus on making your resolution more specific.

Do you want to set a budget and stick to it?

Or have a no-spend month?

Or pay off one of your debts in full?

When you have it figured out, WRITE IT DOWN!

Not so sure about writing down your goal? Remember that research shows that people who write down their goals are three times more likely to achieve them.

Your next step is to make your resolution measurable.

This is the best way to have tangible results that you have achieved your goals!

How can you measure your success?

Let’s go back to that “I’m going to save money this year” resolution.

How can we make this measurable?

Your measurement can be measuring the actions you take during the year, like “I’m going to put $20 from every paycheck into savings” OR “I’m going to increase my 401K contribution by 1% for the whole year.”

Or you can measure your success by the end goal.

What about “I’m going to save money so I have $3,000 in my emergency fund by the end of the year” OR “I’m going to save for a vacation to Hawaii and pay for the whole trip in cash”?

Whether you measure your resolution success by the steps you take or end result, just make sure it’s measurable!

It’s important to remember that setting unrealistic goals will always lead to failure.

If you’re living paycheck to paycheck right now, paying off $20,000 in credit card debt by the end of the year may not be an attainable resolution.

This kind of goal will likely either burn you out while you try to reach it, or you’ll give up because it’s just too hard.

Maybe you’re the kind of person who can accomplish a huge goal like that.

But you know you best.

How can you make your goal attainable?

What about a step in the right direction on that credit card debt?

“ I will pay off one credit card this year “ is a great starting spot on your money saving journey. And then it’s attainable again next year!

If you know that you only have $10 in your bank account at the end of the month, consider aiming for saving $25 or $50 each month, not $1,000.

Remember that attainable New Year’s resolutions are their own form of financial self care.

While we’re on the topic of achieving your resolutions, let’s make sure they’re also realistic.

There are only 365 days in a year, and you are only one person.

Thinking of setting a New Year’s resolution to pay off all of your debt, save 80% of every paycheck, AND max out your 401K?

Those are all GREAT resolutions, but let’s go back to those baby steps.

If you’re going to set HUGE goals, start off with some small steps.

In this case, one of these goals might be realistic.

Set a plan to pay down your debt in a realistic fashion. Watch that burnout!

Once you have your debt paid off, you have opened up ways to save 80% of your paycheck OR start contributing more to your 401K.

Remember, the purpose of a New Year’s resolution isn’t to set you up for quick failure!

Finally, define your timing.

Do you have one last debt payment left, and you’ll be debt free? Maybe your timeline for that resolution is only one month! Great job!

But what about some of these bigger resolutions?

They could take weeks, months, or the whole year.

When you decide, write it down and get started!

New Year’s resolutions can be tricky, so we’ve made a list of some SMART resolutions to get you started.

Instead of “I will save money this year”…

I will create AND stick to a budget this year.

Set up a monthly budget and schedule regular check-ins weekly and monthly for the entire year

I will stop spending money on things I don’t need.

Start by reviewing your budget at the beginning of the year and stick with it. Is it time to cut the cord?

I will stop paying late fees.

Set up auto pay for the minimum payment on your credit cards. If you’re not up for that, set calendar reminders for yourself- and stick with them!

I will save money with at least one spending challenge this year.

No-spend week? No takeout month? Your options are limitless!

I will start building an emergency fund with the goal of funding it equal to 2 months of my expenses.

There’s no time like the present to build an emergency fund! Start by figuring out your monthly expenses, how many months you want to save, and how you’re going to save for it. You’ll feel so much better being prepared for emergency expenses!

I will use cashback credit cards for all of my spending this year, and I will save the cashback for holiday gifts in December.

An easy way for your spending to make money is to use cashback credit cards. If you’re not ready to give up your Amazon habit this year, check out the no-fee Amazon Rewards Visa Signature Card. 5% on all of your Amazon purchases and 3% on Whole Foods purchases may not seem like a lot, but they definitely add up!

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Instead of “I will achieve my (incredibly vague) financial goals”…

I will identify ALL of my debt and build a realistic payment plan to pay down $1,000 by the end of December.

Gather up all of those awful bills and check your credit report, so you can be honest with yourself about what you owe. Then take your first step to start paying it down!

I will save $20 from each paycheck all year into a Christmas gift budget.

Look at your budget and see where you have a little wiggle room to save some money. Maybe it’s a little, maybe it’s a lot. Find a purpose and a place to save it!

I will pay off my student loans in 2 years.

Your New Year’s resolutions don’t have to stop at the end of THIS year. If you’re on target, keep it going! Just remember to treat yourself along the way to stay motivated- paying off big piles of debt is HARD!

I will raise my credit score by 25 points in the next 3 months so I can buy a house.

Learn about what impacts your credit score, then take the steps to build your score up. Pay down your debt, resolve any bad marks, don’t take out any new credit, and you’re on your way!

I will take a vacation without going into credit card debt.

Pick your trip, set your budget, and start saving. You can do it!

Instead of “I will invest my money to make more money, so I can be rich, retire early, and…”

I will learn about opportunities for investment to understand the risks and benefits of each.

Don’t just throw your money into the stock market because Tesla stock looks really pretty today. Learning is a goal and makes a great resolution!

I will increase my contribution to/max out my 401K/IRA/HSA by the end of the year.

Remember that any of these investments is an investment in your future! Every little bit counts- not just maxing out!

I will research and understand the FIRE movement by listening to 1 podcast and reading 1 blog post about it each week.

Yes, getting rich, being financially independent, and retiring early all sound GREAT! But remember that there are some serious steps to take on the path to get there. Start with the basics, learn from the experts, THEN start off on your path. Rome wasn’t built in a day, and YOUR empire won’t be either.

I will contribute $5,000 to my kids’ 529 plan by the end of the year.

Investing in your kids is an investment in your future, too! Do some research into the MANY plans you can put money into for their futures, then start saving!

Now that you have a strategy and some ideas, what New Year’s resolutions are you setting for your finances this year?

Share with us in the comments- there’s no better start than writing it down!