If you’ve been brainstorming your financial resolutions for 2016, you’re not alone: According to Fidelity Investments’ 2016 New Year Financial Resolutions Study of 2,013 adults, more Americans are making financial resolutions this year than last year. About 37 percent of respondents said they were considering a financial resolution for the new year, compared to 31 percent in 2015. The most popular resolutions mentioned were saving more (54 percent), spending less (19 percent) and paying off debt (16 percent).
Not everyone will master their resolutions. However, goal-setting experts say you can increase your chances of success by making your resolutions as specific as possible and developing an action plan with small steps you can follow.
“The best resolutions are specific and measurable,” says Bethy Hardeman, chief consumer advocate at Credit Karma. Many people make the mistake of getting tripped up by being too general, she says. “If you’d like to spend less on dining out, then aim to have two home-cooked meals a week,” she suggests.
You might also benefit from first assessing your financial situation before setting your 2016 goals. Joe Eppy, founder and president of The Eppy Group, a financial firm based in Fort Lauderdale, Florida, says he often first reviews cash flow and assets with his clients. After conducting that review with one couple, he says they were able to rebalance their retirement accounts and shift spending habits to make sure they were on track to meet their retirement goals. “We started with simple budgeting exercises,” he says, which he likes to repeat every year to make sure clients stay on track.
The good news for resolution-setters is that people who make financial resolutions might do better financially. Fidelity found that among those who made a 2015 resolution, more than half say they are doing better financially, compared to 38 percent of those who didn’t make resolutions. Those who made resolutions last year were also more optimistic, more likely to be debt-free and more financially secure than those who didn’t.
Those findings echoed a 2015 New Year’s resolution survey of 1,006 adults by Allianz Life Insurance Company, which found that 41 percent of respondents planned to make a resolution to better manage their money. “Respondents in this year’s survey admit to having several bad financial habits to overcome, including spending too much money on things they don’t need and not saving as much money as they could. While these bad habits can be difficult to change, they are behaviors people can address by taking small steps to regain control,” says Katie Libbe, vice president of Consumer Insights for Allianz Life.
Libbe encourages people to put money into savings on a regular basis and to stop using credit cards; relying on cash instead can help people get insight into their spending habits and what areas they can adjust to meet their saving goals, she adds.
You might also want to consider sharing your goals publicly, which can help hold you accountable, says Kris Duggan, chief executive and co-founder of the goal-setting software BetterWorks.
He adds that research suggests that people who write down their goals are more likely to accomplish them. “Choose either a group of people or an accountability partner to hold you to your goal. It might help to talk to your network about ideas for a goal before you even set it,” he says. That could mean sharing the goal on social media or meeting up in person with your accountability partner.
Duggan also encourages people to aim big instead of picking a more manageable goal that you know you can easily complete. “Be OK with falling a bit short if it means you shoot for the stars. Often, I see people intentionally setting an easy goal so they know they’ll achieve it, but in this case, they are robbing themselves of achieving more,” he says. That is especially true with financial goals, he adds.
Even big goals, though, can be easier to handle if they are broken into smaller pieces. Paul Socia, CEO of Miramar Federal Credit Union, says a large goal, like saving for a house, might be more easily achieved if you figure out what you need to do first — for example, perhaps you need to pay off your car loan. So the goal can be to make 15 payments on your car loan during the year, so you can reduce your car loan and more easily qualify for a home mortgage.
For people with specific savings goals, such as buying a new car or a home, Socia suggests opening up a savings account that is earmarked for that goal. You can make automatic payments into that account, and grow it over time. “The best savings plan is when you do not see it before it’s deposited,” he says. He adds that people tend to have the most success when they are flexible. If your child suddenly needs braces or your spouse loses his job, then you might need to adjust your goals.
Credit Karma’s Hardeman says many people end up making their resolutions more difficult than they need to be. If you want to save more, she suggests setting up automatic deposits into a savings or retirement account. She took a step toward reaching her own goals by sitting down with her husband to review their monthly subscriptions and canceling ones they didn’t use. She decided to run with friends and co-workers during the week instead of paying for a personal trainer at the gym. “By starting small and being honest with what I did and didn’t actually need, I was able to make meaningful and positive changes for our household budget,” she says.
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Your Guide to Writing Ironclad Financial New Year?s Resolutions originally appeared on usnews.com
