Dear Money & Crisis Reader,
While I was throwing a New Year’s party this year, my wife popped the dreaded question…
“What’s everyone’s New Year’s resolution?”
What followed was a half-hour debate on how resolutions don’t work.
As I’ve gotten older, this discussion has become a mainstay of the holiday — as much as turkey at Thanksgiving or presents at Christmas.
The sad truth is, just 8% of people keep their New Year’s resolutions.
Today I’d like to focus on what those 8% are doing that the rest of us aren’t.
The good news is, there’s only one thing that people who succeed at keeping their resolutions do differently.
They have an action plan!
Think about it…
There’s a major difference between saying your resolution is to “lose weight” — and saying that you’re “going to lose 15 pounds by hitting the gym twice a week and cutting out ice cream.”
Planning is the No. 1 factor in achieving your goals — and that includes building your emergency savings and other financial goals.
I know planning can be daunting (and frankly a little boring). But it makes achieving your goals easier and a lot less stressful.
Luckily, there are tons of tools out there that make planning easier than it’s ever been — from smartphone apps and websites… to tricks for overcoming psychological hurdles.
To help you reach your financial goals for 2018, I’m going to show you three of my favorite tools right here.
Let an App Do the Work for You
There are a whole bunch of personal finance apps out there. Some are good for managing investments. But they can be overpriced.
For budgeting and managing goals I like Mint.com. It’s easy to use, free, and tracks your bills and spending automatically.
Simply link your accounts, cards and bills to this online app and it will calculate your monthly spending in real-time. It presents all your financial information in simple, easy-to-understand graphs.
And for your “resolutions,” you can create new goals. You can set a goal to pay off credit card debt or save $10K — and these are tracked against your monthly budgeting.
Keep It Simple
If you’re shooting for the moon, you’ve got to build a rocket first.
A little bit of ambition is admirable. But promising extreme life makeovers packed with long lists of dramatic changes isn’t realistic.
Studies show that folks who take on long lists of competing goals are doomed to fail. The initial buzz from the promise of change can be exciting. But in the end, taking on too much weighs too heavily on the mind.
The truth is that change — real change — happens one step at a time.
Start by setting yourself one achievable financial goal — like saving $1,000. Once you hit that goal, set yourself another… and then another.
“If you can’t measure it, it’s not a very good resolution, because vague goals beget vague resolutions.” — Clinical psychologist John Norcross
The promise of “getting your finances in order” isn’t going to put $10K into your savings account any more than planning to “lose weight” will help you drop 10 pounds.
Without obvious steps to follow, there’s simply no way of achieving your goals.
Come up with a specific plan, and all you have to do is stick to the plan. It doesn’t have to be super complicated, just one or two sentences that outline your plan.
Here are some examples of specific financial resolutions:
“I’m going to get rid of my credit card debt by paying off $250 every month.”
“I’m going to create a financial emergency fund by saving 5–10% of my monthly income.”
“I’m going to create a budget to track my spending… and cut my spending on alcohol in half.”
Of course, January isn’t the only time you can make big changes in your life. Over the coming weeks and months, I’m going to show you tons of techniques and methods for preparing your finances for a financial crisis.
Until then, hit me up with your 2018 financial resolutions and let me know if there are any topics you’d like me to tackle this year. You can send me an email by clicking here.
All the best,
Editor, Money & Crisis