Why financial New Year’s resolutions fail
With New Year's Eve upon us you may already have an idea of a financial resolution. The only problem with New Year's resolutions is that it can be difficult to stick to them throughout the year, even with the best of intentions. Here's what to look out for to make sure your shiny financial New Year's resolution doesn't get tarnished.
It can be great to set a goal so high that it gives you the motivation to push hard to try and reach it, but if the goal is too far out of reach, you're likely to feel disconnected and give up when you don't make any visible progress.
A goal should be just slightly out of reach of what you can realistically achieve. For instance if you know you can save £200 a month, then setting a goal of saving £280 a month will be a bit of a challenge, but not so much that you'll get frustrated and give up if you don't reach it.
Focusing on the negative
When people slip up, they tend to be really hard on themselves for having made a mistake, but the key is not to dwell too long on it and become discouraged. Acknowledge it, vow to do better and try again.
For instance, if your plan was to track your spending but you happened to forget a load of receipts for a day, don't despair. Don't write off the whole month as a failure, try again the next day and continue along as if you had never stopped. Researchers have found that it takes around 66 days on average to form a habit and ranges anywhere from 18 to 254 days. Missing a single day doesn't reduce your chances of forming a long-term habit.
Not setting firm guidelines
The thing about goals is that they are just dreams until a plan and a deadline are attached to them. If you have set a goal that is too vague — such as "I should pay off my credit card this year" rather than "I will pay off my credit card this year by September by putting £300 a month towards it" — it's a clear sign your resolution will probably not be a resounding success.
Re-visit your motivation for what you want to do this year and set a firm goal in your mind using the words "I want" or "I will". Afterwards, come up with a plan with all the steps laid out and the people you need to contact to make your goal a reality. Then assign milestones and a deadline for everything you want to achieve.
Now all you have to do is execute your plan and review it on a regular basis.
Ignoring your progress
It's important to be aware of your progress and provide positive reinforcement when things go well. We all love a little reward for a job well done and it's no different with New Year's resolutions. Set milestones after you reach each financial goal, such as at three, six, nine and 12 months.
If by the first milestone (three months), you've reached your goal of clearing a quarter of your debt, acknowledge your progress and reward yourself with a reasonable treat that you've been foregoing for the past few months.
Keeping it to yourself
One of the better-known tricks to staying on track with your resolution is to find and use a friend or a group of people to support you. If you communicate on a regular basis with like-minded people, you will feel more motivated to stay on track because your goals will be constantly on your mind.