Set goals with deadlines to help stick to your new year’s resolutions
Track your progress and adjust lists when circumstances change
It is good to have the best intentions, but apparently more than 80% of us fail to keep our new year's resolutions, with many failing before the end of January.
Did you make some new year’s resolutions about how to manage your money better?
Did you resolve to spend less on credit, save more, budget better?
It is good to have the best intentions, but apparently more than 80% of us fail to keep our resolutions with many failing before the end of January.
In the US, the New York Post reported research by a social network of athletes which found that January 12 was the day most health and fitness resolutions were broken.
Personal finance sections of leading business publications like Forbes in the US and the Financial Times in the UK suggest that rather than setting new year’s resolutions you should try to define your financial life goals.
“Doing this can actually have an impact on achieving them, by helping you to maintain focus in the face of distractions, setbacks or challenges,” says Jason Butler, the Financial Times’s personal finance columnist.
In a column published for start of last year entitled “This year, don’t set any New Year’s resolutions”, contributor Ashira Prossack advised Forbes readers not to set resolutions and become a statistic, but rather to set actionable goals.
“Goals are specific, whereas resolutions tend to be broad and vague. Goals are much more actionable, which is what makes them more effective,” she wrote.
Prossack suggests you be clear about what you want to accomplish, why it is important and how you will make it happen.
She says if you have a broad resolution like you want to make more money, you should break it down into the steps you need to take – do you want to get a promotion or change jobs or start a side hustle.
If you want a promotion, perhaps you need a coach or a mentor to help you achieve that goal. If you want to change jobs, you must update your CV and plan how to network and search for opportunities, she says.
Generally in life, if you want something you have to work for it, and the same applies to your finances. The clearer you are on what you want, the more likely you are to work for it.Gontse Tsatsi of Old Mutual Investment Group
“Get as specific as possible and outline all of the smaller steps you’ll need to take to reach your full goal,” she says.
Butler says most people’s overarching financial milestone is to get to a place where money is not something they worry about, nor holds them back from living the life they want.
In the early stages of that journey, you may need to eradicate expensive debt, get control of your day-to-day spending and build an adequate emergency fund to improve your overall sense of wellbeing, he says.
Another way to master your money is to develop effective habits and behaviour that serve you well on a day-to-day basis and compound over time to improve your financial position, Butler says.
Developing effective money habits, having a lifestyle you can afford and thinking carefully about your family priorities will help you identify and reach these goals or milestones — the key to having money serve you well over your whole lifetime, he says.
Back at home Gontse Tsatsi, the head of retail distribution at Old Mutual Investment Group, echoes Butler and Prossack’s advice, saying if you set clear goals and have a plan to achieve them you are more likely to succeed.
“Generally in life, if you want something you have to work for it, and the same applies to your finances. The clearer you are on what you want, the more likely you are to work for it. You need to have discipline to make your money work for you. After all, your goals should be compelling enough to spur you on when you have to balance short-term sacrifice for long-term investment.”
Tsatsi says if you have a goal like saving more, you need to set a behaviour you can repeat continuously – like setting aside an amount at the beginning of each month - until it becomes a habit. This is similar to what you do when you commit to regular exercise.
To avoid falling off the wagon, he suggests you identify goals that drive you.
“There’s a saying that goes ‘a goal is a dream with a deadline’. In other words, until you put a timeline to something, your list is nothing more than wishful thinking,” Tsatsi says.
He also suggests breaking down goals into smaller milestones and setting a deadline to make them attainable.
“Without a clear goal, most people will find themselves spending rather than saving. When you have clear deadlines and milestones, it is also easier to celebrate as you make progress on these,” he says.
Butler, however, suggests that setting goals with rigid deadlines like paying off your home loan by the age of 45, or retiring by the age of 60, isn’t the best idea.
He says you should set objectives and then measure the progress you have made to achieve those objectives over the past year, five years or a decade. “You can be a bit easier on yourself and this will help protect your confidence and reduce feelings of guilt or frustration,” he says.
Tsatsi says if you keep your goals top of mind – track your progress, adjust lists when circumstances change, and continually set new and inspiring milestones you have the best chance of success.