How to Make Your Financial Resolutions Stick

Along with getting in shape, improving one’s personal finances is another popular New Year’s resolution. Every year, millions of Americans vow to get out of debt, save more money, or contribute more to their retirement accounts. Did you make financial resolutions this New Year? If so, read on to find out how to make those resolutions stick.

Be Reasonable

If your annual income is $40,000, it’s not realistic to declare that you’re going to pay off $35,000 in student loans in 2010 unless you’re going to live in your parents’ basement and eat Ramen noodles at every meal. Unattainable goals will only set you up for failure. It’s important to be ambitious, but it’s practical to be rational. If your goal is debt payoff, sit down and hash out the numbers until you come up with a monthly amount that you can pay towards your debt after you’ve set money aside for necessities and bills.

Be Specific

Being specific is the first rule in the S.M.A.R.T. criteria for goal-setting, a technique used by project management professionals.

• Learn more: S.M.A.R.T. goal-setting

There is a reason why being specific or detailed with your resolutions is so important: you’ll know exactly when you’ve met your goal. Meeting a goal is empowering and builds the path for further personal growth and financial advancement. Instead of saying “I want to save more this year,” try saying “I want to save $5,000 this year”.

Make a Plan

Resolving to improve your finances is an important first step, but how will you get there if you don’t have a plan? Start with the realistic and specific numbers that you’ve already decided on and map out the steps it will take to meet those goals. If you want to save more for retirement, choosing to contribute an extra $500 per month might be the first step. Next, you could investigate setting up an automatic withdrawal through your paycheck so you won’t have to worry about it again. Taking the time to make a simple plan to meet your goal could save you time and frustration down the road.

Baby Steps

If year-long resolutions seem overwhelming, perhaps short-term goals will work better for you. Set up quarterly or monthly mini-goals to help keep you on track. Each time you meet a short-term goal, it will encourage you to keep moving forward. If you need even more motivation, think about setting up small rewards for each achieving each mini-goal. As I study for the CPA exam, it helps me quite a bit to make a goal to complete each chapter of my book instead of taking on the daunting task of reading the entire book front to back. It’s like a small victory every time I reach the end of a chapter.

Don’t Give Up If You Stumble

The definition of a resolution is “a course of action determined or decided on”. A resolution is a journey; it’s a change to our current life. Anytime we work to change, we are bound to stumble a bit along the way. It’s only natural to fall off the wagon occasionally, so don’t beat yourself up if you go over budget one month. Take the experience, accept the fact that it’s normal, and do your best to stick to your budget next month.

Keep a Reminder

A daily or weekly reminder will help you to stay focused on achieving your goals. Consider posting your budget or debt pay-off schedule on your refrigerator or in your phone. You could also set up a recurring announcement in your e-mail calendar. If you don’t mind being “hassled” about your goals, check out Hassle Me—a free website that will irritate you into conquering those resolutions.

Meet Your Goals

Don’t let 2010 be another year where your resolutions fall through the cracks. Obtaining financial independence is the gift that keeps on giving – when you’re debt-free or have a solid emergency fund, you can enjoy your twenties without worry. Good luck, and here’s to prosperous 2010!