How to Set New Years Financial Resolutions (and Stick to Them!)

Date posted: Feb. 5, 2016

Photo Credit: Morgan Sessions

With the new year come and gone, and the first credit card bills due to arrive in the mail, it’s time to get a handle on your finances by setting your new year’s financial resolutiosn for 2016. Whether you want to pay off your debt, get off the credit card treadmill or finally start saving for that dream vacation, setting goals is a great first step to achieving financial success this year.

But not all financial goals are created equal, and there is an art to setting goals that will make or break your success. I’ve been setting financial goals for the past four years, and I’m here to share my insight with you on crafting money goals that you’ll stick to.


Set SMART Goals

A smart goal has the following qualities:

•    Specific

•    Measurable

•    Attainable

•    Relevant

•    Time-Bound

An example of a specific, measurable, attainable, relevant and time-bound goal would be to pay off $10,000 of debt in one year. This goal is clearly defined, has a deadline, will help your financial situation, isn’t too ambitious and is pass/fail. It will be easy to look back on this goal in January 2017 and determine whether or not you achieved it. Either you paid off $10,000 worth of debt, or you didn’t.


An example of a weak financial goal is: finally start paying off my debt. This goal isn’t very measurable or specific. How do you define “start paying off debt”? Is that making a few extra payments? Is that not missing a single minimum payment? Will you be able to determine in January 2017 whether you passed or failed this goal?

To ensure success, stick to the SMART goal setting format.


Set Monthly Targets to Achieve Long-Term Goals

It’s one thing to say you are doing to pay off $10,000 of credit card debt this year, but $10,000 over twelve months is an awful lot of money and an extended timeframe.

To make this goal more manageable, break it down into smaller chunks. Figure out how much progress you need to make on your debt each month or quarter, and check in with your goal regularly to make sure you are on track.

For example, if you have $10,000 in credit card debt at 19.99% interest, you’ll need to pay off $926.30 per month to be debt free by the end of the year. Check in with this goal every month. If you’ve paid at least $926.30 towards this goal, you know you’re on track.


Limit Your Goals to Five or Less

A common mistake made by goal setting newbies is to set far too many goals. As an avid personal finance reader, I’ve read blog posts where the writers declare upwards of fifteen goals to accomplish in one year. At the end of the year, most of them were able to meet many of their financial goals, but not all of them.

Here’s why: setting too many goals can have the adverse effect of leaving you feeling overwhelmed. To avoid this, I recommend setting between three and five financial goals. Setting a small number of goals narrows your focus and increases your odds of success.


Declare Your Intentions to the World

I’m a firm believer that sharing your goals with the world is a great way to galvanize your commitment to getting your finances in order. If everyone is watching you, you’ll work much harder to achieve your goals!

But don’t forget to celebrate publically too! When you hit your quarterly or monthly mini-goals, and especially your yearly goals, reward yourself!

Setting financial resolutions is a major step toward bettering your financial future. But setting creating money goals you’ll stick to is an art form that most people have yet to master. If you follow these tips and stay resolute throughout the year (with those monthly check-ins), you’ll be on your way to a better financial future in just twelve short months.


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