How to make sure you keep your New Year’s resolutions
Written by Carl Turner on January 06, 2017.
How do you rate your chances of keeping your New Year’s resolutions this year? The go-to person for statistics on this is a psychologist from the University of Scranton called John Norcross who has written an entire book on the subject. He claims that 25% of resolutions will be broken just two weeks into the new year and by June, over half will have fallen by the wayside.
So what is the best way to ensure that you keep your resolutions whether they be going to the gym regularly, losing weight or finance-based goals such as saving for retirement?
The key is in setting the right goals. Goal setting is key to successful financial planning and something I do with all my clients. I always recommend the SMART method, which is credited to an American consultant called George T. Doran. Smart goals are specific, measurable, achievable, realistic and time-bound. This is also a full chapter in my new book I have written on financial planning.
Below I show the example of saving for retirement and work through the method.
Applying the SMART method to the resolution of saving for retirement
S for Specific
Detail exactly how much you want to save over the course of the year and then break it down by month.
e.g. I want to save $10,000 this year and will put aside $835 each month
M for Measurable
Resolutions are pretty meaningless if you can’t easily measure how you are doing. To make this simple, set up a dedicated bank account to receive the money and ensure that it is separate from your day-to-day finances. You will easily be able to keep track of how much you have saved and by keeping those savings separate you will be less tempted to spend that money.
A for Achievable
Your saving goal must reflect your income and your monthly expenditure on essentials so you will need to get a handle on how much you spend on living expenses including mortgage, rent, bills, insurance, travel to work and food. While you may want to pay off your debt, acquire an emergency fund and save for retirement, trying to work towards all three at the same time is likely to be demoralising. Research bears this out with studies in the US demonstrating that consumers with credit card debt on several cards were more successful when they concentrated on paying off just one card at a time. This is because if you manage to zero the debt on one card there is a real sense of achievement which is highly motivating. Stick to one goal and you will see results more quickly – you can always save the next goal for 2018!
R for Realistic
Once you know how much you need to live off per month you can work out a realistic figure to save from what is leftover. You may be full of New Year optimism but experience shows that the optimism we feel right at the beginning of the year can quickly fade!
T is for Timebound
In this example the timeframe is a year. That will enable you to look back this time next year and clearly see if you succeeded in your goal.
So what target will you focus on for 2017? If you would like to set and achieve a realistic financial goal such as finally looking at retirement planning and investments, taking out life insurance or tidying up existing investments and would like assistance with this please let me know. I would be happy to help you plan and achieve your goals.