New Years Resolutions to Improve Your Finances

A New Year’s resolution can be an end to a problem or the beginning of a new problem – the added pressure that comes with fulfilling it. Many don’t bother making resolutions anymore as they can leave you feeling like a failure when you don’t follow through on the promises to yourself. 

As of June 2021, over 90,000 Canadians declared bankruptcy. These are not pleasant numbers but with the after-effects of COVID-19, they are understandable. Managing finances can be a tricky task at the best of times, but with a clear plan, you can reach the loftiest of goals. Trust and belief alone can carry you through despite the obstacles that may come your way. However, the critical aspect of making New Year’s resolutions that are successful is the ability to form a habit.

Financial resolutions often fail to become a habit primarily because of five reasons. Addressing these five reasons can ensure you stick to your plans throughout the course of this year.

  1. A lack of incentive
    Any resolutions lose their pull when you lack the incentive to do them. It is difficult to commit to a challenge going when there is no reward at the end of it.

    The resolution: Promise yourself a reward.
    You can counteract this by promising yourself a reward by the end of the year. Not only will this act as an incentive that pulls you towards your goal, but this reward will also help you carry through on your financial promises. The reward can be anything from something large like a golf trip to something smaller like a day at the spa with friends.

  2. A lack of self-control
    Self-control guarantees the success of resolutions. A lack of it will likely make your resolutions a failure. You can’t expect to give yourself a financial reward at the end of the year while spending excessively every single month. If you cannot stop yourself from spending extravagantly then your resolutions will fail quickly.

    The resolution: Track daily spending for a year.
    Self-control can be obtained by forming minor habits. Restraint is a difficult skill to master but tracking your finances can provide you the motivation to master control. You can input your everyday spends in one of the many apps that enable tracking and form a habit of staying within the allowed limit every day.

  3. A lack of consistency
    Yet another reason New Year’s resolutions fail is a lack of consistency. If you cannot continue to perform your duties towards your goal and hit them with regularity, you will not achieve the success that you had hoped for. Half-hearted efforts and complacency can lead to broken resolutions.

    The resolution: Follow your financial limits every month.
    First, you must establish a spending limit. It can be bi-weekly or monthly, but it must be followed with as much discipline as possible. Following this limit will keep your finances at a net positive, based on how much of a limit you’ve set. Keep in mind that you will not be able to follow this to a T and allow yourself to go over budget every now and then. Extreme discipline can lead to loss of motivation.

  4. A lack of intrinsic motivation
    Intrinsic motivation is different from incentive. An incentive is an external reward you grant yourself. When achieved, this brings you joy. However, this is a form of motivation that is external. You can quickly get used to the reward and forget that you need to motivate yourself constantly to get there. This is where intrinsic motivation helps.

    The resolution: Tie your financial goals to family.
    We are all deeply connected to our families. In fact, this forms a key part of wanting to be financially successful – seeing our family happy and taken care of. Tying your financial goals to family, say for example: “I will gift my parents a car this year”, makes it easier for you to achieve financial goals that would be seen as improbable otherwise.

  5. A lack of clarity
    Making resolutions for the sake of making them is a waste of your time and energy. We often don’t take the time to think of what we want or need for the New Year. We “follow the crowd” and resolve to diet or join a gym or start Yoga, but if we’re not truly connected to a resolution, we’re bound to fail. Taking a moment to gain clarity on what you’d like to achieve this year will make all the difference.

    The resolution: Take the time.
    Find a place where it’s quiet and you feel comfortable being with yourself and your ideas. Consider what your goals are for this year then research ways to achieve them. Once done, you will find it easier to execute your goals. Check in with yourself mid-year. Your momentum might have slowed from the start of the year due to life situations and fatigue. That’s okay. Be gentle with yourself. Taking a break will help you reassess your goals and strategies.

  6. Complexity of tasks
    The simplest things are the easiest to achieve. And if you spell them out in simpler terms, then the words will appear to make your task easier. The easier something is to translate into words, the easier it is to achieve.

    The resolution: Keep it simple.
    Resolutions fail not only because of your efforts, but also because you set goals that were either difficult or unrealistic. However, breaking them into little blocks can help you tackle any financial situation. For example, if you want to clear debt, then you can define period blocks of 2 months to save and repay vs worrying about the entire amount.  Complicated resolutions will cause you to fail before you even begin.

  7. A lack of accountability
    No man is an island. This is an old saying that means that nobody is ever truly alone. Ask for help and support with your resolution. Counting on the people around you to hold you accountable for your financial life is not only a great motivator but also a reminder that you’re not alone.

    The resolution: Build an accountability network.
    You are responsible for your choices. However, bringing in a pool of people who are also financially motivated, and have the ability to help you reach your financial goals by holding you accountable for your financial choices, can help ensure you stick to your resolutions. The bigger the network, the higher the accountability. The more people you bring in, the less likely you are to fail in your task.

Finally, you must always remember to take a step back and consider the larger picture. Any progress this year is an improvement from the previous year. You must not get disheartened when there are times during the course of the year that make it look like your financial resolutions might never bear fruit. Instead, you must strive to put one foot in front of the other and keep moving towards them, no matter how difficult it seems now.

Once you do that, the self-belief you obtain from surviving everything that has gone before and that is to come will put you in a state of mind that enables you to take the best course of action you want for your life.

Resolutions only work if you stick with them. You must believe at all times that you will not fail and find ways to keep moving forward even when you do.