Behavioral Hacks for Your (Financial) New Year’s Resolutions

With the end of the year rapidly approaching, the time is once again upon us to set our New Year’s resolutions. Many of us will make our well-intentioned resolutions to get out of debt, increase our savings, or stick to a budget, only to find that we have fallen right back into our old habits by the time March rolls around. Sticking to New Year’s resolutions can be incredibly challenging, particularly when it comes to our finances. However, there are some tricks you can use to not only help you stick to your resolutions, but also set yourself and your family up for a successful financial future.

1: Break it down

Often when we set our New Year’s resolutions, we look at big, general goals. While these goals are certainly important, the fact that they are so big and general makes it easy for us to get off track. That is partly because it is hard to see the progress in the short-term when working towards big, long-term goals like saving for retirement or becoming debt-free. Instead, try breaking the goals down into more manageable, short-term “sprints.”

For example, if my goal resolution is to be debt free, I can make that more manageable using the “debt snowball” method. Essentially, I will pay off my lowest balance account first, and work up from there. Alternatively, I can increase my payments to all accounts by $100/month and set up monthly notifications to track the balances as they decline. The key is to set up and celebrate small wins for yourself that not only get you closer to your goal but also reinforce your motivation and commitment to the resolution.

2: Automate, automate, automate!

When it comes to sticking with New Year’s resolutions, one of the biggest inhibitors to success is one that is also hardest to overcome: ourselves! Whether it be the discouragement felt by not seeing immediate results, lost motivation, or simply being too busy to keep up, we can often get in our own way when trying to stick to our resolutions. Thankfully, technological innovation in today’s financial system has made it easier to take ourselves out of the equation when it comes to reaching financial goals. Automating savings, debt payments, budgeting and more can not only help you stick to your financial New Year’s resolutions, but also put you on the fast track to financial wellbeing.

If my goal is to save more for retirement, I can automate that by increasing my payroll deferrals, and also signing up for an automatic contribution increase every year, if available in your plan. If my goal is to increase my emergency savings, I can do so by setting up an automatic transfer from my checking account to savings every month. If my goal is to stick to a budget, I can set up automatic alerts through one of the many available budgeting apps to let me know when I am veering off track. By automating these things and taking yourself out of the equation, you can avoid feeling overwhelmed or discouraged, and keep your resolutions on track.

3: Bring in an accountability partner

When it comes down to it, sometimes we just need a little outside help to keep us on track. Much like hiring a personal trainer to keep you accountable to your health goals, bringing in a trusted accountability partner can help you keep on track for your financial goals. There are several people that could be a good accountability partner for you, but a few examples include your significant other, a family member or friend that has achieved the goals you are trying to accomplish, or a professional financial planner or financial coach. The key here is trust. You have to trust the person to keep you accountable, tell you the hard truths, and celebrate your progress with you. You may already know someone who has been through a similar financial journey and accomplished the goals that you are trying to accomplish. If they are willing to lend their time, they could be a great accountability partner for you. If you do not have anyone in your inner circle that you feel can hold you accountable, you can look to bring in a professional. Experienced financial planners and coaches are skilled at helping their clients achieve their goals. Similar to a personal trainer, a good financial planner or coach understands the behavioral issues you face and knows how to keep you motivated to accomplish your goals. Remember, there is no shame in asking for help, so if you feel yourself struggling to stick with your resolutions, or know from experience that you may struggle, bring in someone to keep you accountable to your goals.

These are just a few hacks to help keep you on track to crush your New Year’s resolutions this year. If you are looking for an accountability partner, reach out to us!