We all like to think that a new year will bring an improved lifestyle. We jot down a few resolutions, tell a few friends, buy a few self-help books and voila! Sound cynical? Well yes, but not without good reason. According to The Franklin Covey 5th Annual New Year's Resolutions Survey, the top 2010 New Year's resolution is to "improve financial situation." That's a very admirable - and important - goal. However, a significant number of survey respondents who indicated that they wanted to make positive financial changes in 2010 already anticipate that they won't succeed. Specifically, the Franklin Covey survey found that: (Start the year off on the right foot by evaluating your financial health. Find out more in A New Year's Resolution: Get Richer.)
- 30% of respondents said that "lack of commitment" would derail them.
- 22% said they "have too many other things to do."
- 18% said sheer "forgetfulness" would be the reason they didn't reach their financial resolution.
- The goals are not meaningful to you.
You could likely rattle off a long list of all the things you know you should be doing – paying off credit card debt, creating a budget, participating in your employer's 401(k) plan, etc. The problem is that, deep down, even though you know those goals should be important to you, they're just not. If you're being honest, you aren't overly concerned about your retirement or paying for a future child's college education. You're just trying to make it day-to-day and you have a lot of other things demanding your time attention and, quite frankly, your interest.
Solution: Instead of resolving to do something you think you should be doing, make it more attractive – and therefore worth working toward. For example, if you can't get excited about creating a personal budget, frame it differently. Could you get excited about having enough money within one year to take a special trip with friends or family? If saving for retirement doesn't rev your engines, what about focusing on the idea that you could get free money (if your employer provides matching 401(k) funds)? Figure out what you want and adjust your financial resolutions in those terms.
- You haven't set yourself up for success.
Think about how many times you've woken up on January 1 and vowed to lose weight. Eager to get started on the right foot you decide to go for a jog but can't find your tennis shoes. Undaunted, you switch gears and move to make a healthy breakfast, only to open the refrigerator and realize you have no eggs or vegetables. Thirty minutes later, you're eating waffles, reading the paper and making a note to go shoe and grocery shopping later. Except, too often, later never comes. Successfully reaching a goal involves not just work, but preparation to do the work.
Solution: Get yourself on the right foot by putting the smaller things in place first, before you begin to tackle your biggest areas of financial weakness. For example, before you can pay off your credit card debt, you need to know how much you owe – so you'll need to dig up your most recent statements or go online. If you want to begin saving money, start by putting together a budget to see where your money is going – only then can you make better spending decisions and have money to put aside for more important goals.
- You are only focused on what you're doing wrong.
Goals can be motivating, but if you don't take the time to also recognize and reward yourself for what you're doing well, they can quickly become a source of discouragement.
Solution: Next to the list of things you want to do differently this year, write down what you're doing well and would like to continue. You may be surprised to see how much you're doing right, and you'll certainly be more motivated to attack those areas where you're feeling weak.
- Your goals don't take life into account.
While January is the normally the accepted month to make New Year's resolutions (for obvious reasons), it may not be the best time of year for you. For example, if you want to pay down your credit card debt but you rely heavily on seasonal income that you earn in the spring and summer it's going to difficult to make much headway until then.
Solution: Be honest about what life is like right now, and figure out what you can realistically begin to work on and what can be addressed later. As long as you have set some realistic goals and timelines, it's not procrastinating – it's planning.
- You have too many.
Let's face it – you're not superhuman. You can only do so much, and life isn't going to stop so you can put 100% of your time and energy into your New Year's resolutions.
Solution: Pare down your list to a smaller handful – say three or four resolutions, at the most – that are really meaningful to you. Fewer resolutions can help you focus your efforts and increase your likelihood of succeeding. Keep your other resolutions in mind, but don't worry about working on those until after you have made some real headway with your top priorities.
We can all use some improvements, and usually, the new year is the perfect time to commit to them. But we need to look inside and determine whether these changes are realistic, time-sensitive and of high priority. Otherwise, we just end up spinning our tires. (Find out what to do if you have a dispute with your broker, in Get A Hold On Mishandled Accounts.)