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Posted 12/31/2021 in Family Finance

The #1 Reason Money-Related New Year’s Resolutions Fail (and How You Can Succeed)

The #1 Reason Money-Related New Year’s Resolutions Fail (and How You Can Succeed)

Why do money-related new year resolutions fail, and how can you succeed?  Read on!

Health and fitness have always dominated the top of new year resolution lists.  In a 2021 survey of 1,500 adults (statista.com), three of the top four resolutions focused on health:

  1. Do more exercise or improve my fitness
  2. Lose weight
  3. Save more money
  4. Improve my diet

Why are health and fitness goals always at the top of this list?

Health and fitness goals reflect what people want, can control, and can measure.  

When formulating new year resolutions, people focus on things which they want to happen, have some control over making happen, and can measure, so they can see whether they succeeded in accomplishing the goal.   That’s why personal health resolutions are so popular.  Everyone wants to improve their health—even the fittest find things they want to improve about their health.  Individuals have control over whether they exercise, eat, and behave in ways to improve their health.  And progress is measurable in pounds on the scale, reps in a gym, calories and fat on a diet tracker, days without an inhaler, and more quantifiable ways.  

But do “want, control, and measure” hold true for money goals?  

The Mindset Behind Adding “Save More Money” to a New Year’s Resolutions List

Do most people want to save more money?  Yes, like physical health, most people want to improve their financial health, whether they are swimming in debt or floating on a million-dollar trust fund.  

Do people have some control over saving their more money?  Yes, people make choices on how to spend and save their money every day.  While some situations only have limited choices, and some choices do not feel like choices at all, they do exist.  

What about measuring?  Is “save more money” measurable?  While financial goals are measurable, “save more money” is not as easy as stepping on a scale.  


Why Do Financial Resolutions Fail?  Lack of Measuring

Financial resolutions fall into this interesting area where, yes, in theory a person can measure money saved, but most people will not take the time to do it.  It’s easy to see how people can be sidetracked trying to figure out how to save money and skip the quantifying that is necessary in order to judge whether the goals have been met.   Some will grow frustrated with the uncertainty and give up; others will think they are working toward “saving more money” but not undertake the scale they could and will over or under estimate their success; a third group will not commit to their plans because they don’t see how it can impact their lives.  All three groups fail.  Lack of measuring leads to failure.  

Example: Measure “Weight Loss” and Measure “Save More Money”

If a person was tracking “weight loss” they would write down their current weight, probably pick a target weight and date by which they want to reach it, and maybe even calculate a few milestones to celebrate along that path.  The second step would be to decide how to travel that path—a plan combining diet, exercise, probably some new rules to follow, and willpower.  There would be measurable aspects of that plan, too, such as a certain number of reps, a specific amount of time exercising or number of classes to try, and measurements of nutritional values of foods.

The same is true for people who want to succeed when tracking “save more money.”  They begin by writing down their current savings, or debt.   That means checking the balances of all accounts (savings accounts, checking accounts, credit card accounts, mortgage loan, and any other loans or financial instruments), adding them up, and writing that number down.  That first step is a lot more cumbersome than simply standing on a scale.  This first step is where people fail.  Many people will not take the time to calculate their actual current financial situation.

Why not?  Why won’t people measure their current financial statuses?
1)  Avoidance.
People don’t want to see confirmation of what they suspect is a bad financial reality.
2)  Social norms.
Celebrities, neighbors, and peers display lifestyles above most people’s means; some people are more likely to turn a blind eye to their own financial reality so they can pursue a prettier lifestyle without guilt or embarrassment.
3)  It takes time and math.
Many people avoid math, and most feel they are “too busy” to add something else to their to-do lists.

Our Advice on How to Succeed:
1)  Stop avoiding reality.   

2)  Realize most “social norms” are based on people avoiding their realities.  Ignore those “social norms.”  Focus on your reality.

3)  Get a calculator or the calculator app on your phone.  It’s just addition and subtraction.

4)  If you had enough time to read this article, you have enough time to collect your banking documents (or call the bank or look at your balances online), and just add all the balances.  When people say they are “too busy” what they really mean is “I will not prioritize this over other things I already do.”

The Easy, Fun Parts 

Once a person has measured their current savings or debt, the most difficult part of working on the resolution is over.  The second step is to pick a target savings amount and date by which they want to reach it.  Then, pick some milestones to celebrate along the “save more money” path.  Next, take a good look at those goals and decide how to travel that path—a plan of cost cutting, income growing, new financial rules to follow, and willpower.  

Arguably, the final portion is the most difficult because a person actually has to act out the plan—cut back on some things, look for additional income, and face difficult choices.   However, a person who has systematically gone through the first steps of measuring current savings, setting goals, and devising a plan is mentally preparing for what’s to come.  That mental preparation will help decrease the difficulty of making those choices.  

Conclusion: How to Succeed at New Year Resolutions

In conclusion, new year resolutions—and similar goal creations—should be chosen because they are something the person wants, can control, and can measure.  And in order to succeed, the person needs to want, control, and measure to clarify the resolution and follow their chosen path to reach the goal.

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