Here's a great conversation starter: Sometime around February 1st ask people how their New Year's resolutions are coming. On second thought, that topic may not garner many smiles, as chances are only a few people will be successfully moving towards their goal. Most of them will reluctantly admit that they're not doing so well, but still hope to do better.
Such failures are not because the resolution was unattainable. Often lack of success is caused by misunderstanding the resolution or poor planning and execution. So even if you're already failing in your New Year's financial resolutions, don't despair—there's still a way to keep them and achieve your goal.
Consider these questions and see how many relate to you and your resolution. Then take the action suggested to put yourself back on the track to success:
• Do you know why accomplishing this resolution is important to you? It could be that it's not important and failure is not a big deal. But, if the goal does matter, then knowing why is important, too. Understanding how a resolution could change your life is a huge motivator.
• Did you map out your strategy? Unless your financial resolution was a simple one (e.g., keep a coin jar on the kitchen counter), you'll need a plan on how to achieve it. Developing a plan will also help you gain a better understanding of the resolution.
• Have you considered how your personality affects the resolution? Typically, if you have some bad financial habits there’s a reason for them. You could be making up for some childhood deficiency or current psychological need. Take some time to study the habit you want to change and why you've persisted in the habit. Skip this step and your resolution could be doomed to failure.
• Did you create specific steps to reach your goal? Saving $1,000 by the end of the year is a great goal, but deciding to bring your lunch to work three days a week and put the money saved into a savings account is more likely to be successful. We need ways to measure our progress on a regular, frequent basis. Failures can cause us to correct our course, while successes can be celebrated.
• Did you create small, reachable steps? Not only do tasks need to be specific, they also need to be small enough to be accomplished. Your resolution may be to set up and put money in an IRA. The first step is to research potential custodians for the account and their advantages and disadvantages. That's a task that you can complete in a week or two. Then move on to the next small step.
• Do you have a way of tracking your progress? A resolution without any way of measuring progress is really just a wish. Concrete measures like dollars or days are better than how you “feel” about something.
• Did you decide in advance to not let one failure end your quest? It's easy for someone to get discouraged when they fail, but missing one target or deadline doesn't mean they should give up on the resolution. Perhaps you only manage to save $950 during the year instead of the $1,000 you were aiming for. However, if you can put the failure behind you and renew your efforts, you can continue to move closer to your goal.
• Did you build in any accountability? Like our initial conversation starter, none one likes to admit they’ve failed—which can sometimes work to the person’s advantage. If you haven't already, tell a close friend about your resolution and the individual steps you plan on taking to get there. Give them permission to ask about your progress, since just knowing that they'll be asking will help stiffen your determination if it grows weak.
• Have you decided how to reward yourself for success? Many resolutions have a reward built in to their accomplishment (e.g., save enough to buy a new car). But others, like saving for retirement or paying down debt, don't have such tangible rewards. Treating yourself to an inexpensive reward can be a good way to keep you motivated.
With these tools applied to your resolutions, you’ll increase your odds of achieving success immeasurably. In fact, there's a good chance that at next year's party you'll be the one telling how your resolution changed your financial life.
Gary Foreman is a former financial planner who founded TheDollarStretcher.com. The site features thousands of articles on how to save your valuable time and money, including more on setting monetary goals.