It’s been over a month since you popped the champagne and sang the last verse of Auld Lang Syne. So why are we bringing up New Year’s when we’ve already closed the book on 2018? The answer is in your New Year’s resolution. After a long and expensive holiday, most of us wake up in a brand new year ready to make positive changes to our finances.
If you had to stop by our homepage for help with the unexpected, maybe you promised to save more in an emergency fund this year. At first, it’s easy to stick with this goal. But with several weeks of 2019 under your belt, something usually goes awry. According to a U.S. News & World Report, 80 percent of New Year’s resolutions fail by mid February.
To avoid becoming another New Year’s statistic, we’ve compiled some tips below to help you turn a failing resolution around and meet your financial goals in 2019.
Casting the blame on anyone but yourself may sound like armchair advice, but there’s an element of truth to this line. The type of resolution you make plays a very important role in your success as much as your own behavior. You may set yourself up for failure by not properly defining your goals.
Put simply, every successful goal includes enough detail to enable you to achieve it.
Imagine your New Year’s resolution is a physical destination you’ve never been to before — like a friend’s new house in another part of town. You need information about the destination before you can embark on your trip. Without things like the exact address, directions, and the time it will take you to get there, you’re unlikely to arrive on time — if at all!
The same kind of logic applies to your New Year’s resolutions. Without knowing exactly what you want and how you expect to get it, you won’t get very far.
Although the goal to “save more” sounds great, it doesn’t provide you with enough details. Think of it this way — roughly one-third of survey respondents said their resolution for 2019 was to save more money, but this can’t mean the same thing to everyone.
To personalize your resolution, you’ll want to answer the following:
This list of questions is long, but it serves to illustrate a point. A lot of detail goes into creating a well-defined, attainable goal. If you can’t answer these kinds of questions, you’re not setting yourself up for success.
If you’re ready to set goals you’re more likely to achieve, the S.M.A.R.T. technique is here to help. It’s a mnemonic device that helps you create clear, definable goals with distinct deadlines.
You can break down this acronym into its five letters — each standing for a different yet important step to setting achievable goals. So let’s start with the first letter and go from there.
This first step is all about clarifying your needs and wants by naming your goal with exacting language. When applied to a generic goal like “saving more”, this step will help you clarify what “more” means to you.
For instance, there’s a chance your goal has to do with a recent loan you’ve taken out. You may want to save $200 to cover your payday loan repayment if you have one, or you may need to save more if you have an installment loan due.
Not sure about the difference between these two products? You’ll find some helpful info when you check this out. It shares a quick look at our installment loans, so you know more about what we offer.
If you don’t have a loan outstanding, you may have your sights set on accumulating enough cash to purchase something. Maybe you want to save $10,000 for a rainy-day fund. Or maybe you want to save $20,000 for a down payment on a house.
If you aren’t sure how much money you need for your goals, it’s time to open up a search engine — we always encourage researching your options. With a little time in front of the screen, you may be able to find answers to more challenging questions, like:
Once you have a better idea of how much money you need to pay off your credit card or save for retirement, you’re ready for the next step.
Even with a clear objective like $200, $10,000, or $20,000, your resolution still lacks important details.
The Measurable step asks you to break down your goal into a number of deliberate tasks. This exercise is especially helpful when you’re thinking about how to save for a house, as it helps to dismantle a daunting goal into several smaller objectives.
For example, rather than only focusing on the need to save $20,000, this step will help you figure out daily, weekly, or even monthly savings goals you’ll need to hit in order to reach $20,000. When you can focus on these smaller steps, you’ll find it easier to stay on track.
It’s not always easy figuring out how to start saving for a house — especially if you plan to save as much as $20,000. The best way to save money for a house involves a lot of hard work and flexibility.
For instance, you’ll have to commit a larger chunk of each paycheck to savings than if you were focusing on a smaller goal like meeting your payday loan due date. You’ll also have to find out how much of a down payment you need for the specific house you want to buy.
For the purposes of this example, $20,000 is a great down payment for the median house price in the country, but it may not fit your finances or the home you one day hope to own. This is why it’s important to measure your specific situation, and plan appropriate steps.
This next step requires you to undergo a quick reality check. It forces you to review what you’ve established so far and determine if it’s practical for your current situation. In other words, it makes you ask yourself the following question:
While thinking of my current bills and responsibilities, can I realistically save this much without throwing my budget off track?
If the answer is ‘no’, it’s time to go back to the last step and figure out how much of your income you can afford to save.
You may want to have your household budget within easy reach when you tackle this step. This financial tool shows you where your income goes each month. It should also give you a good idea of your financial limitations.
If it’s been a while since you last touched your budget, it may need some revising. Check in with our budgeting guide to help you revisit an existing budget or create a new one from scratch. It will help you separate necessary spending from unnecessary spending. Once you can identify your needs and your wants, you’ll be better able to eliminate the wants that do nothing more than limit how much you’re able to save.
In many cases, the wants end up being mindless purchases you make everyday — like extra treats at the gas station or unnecessary subscriptions.
The importance of everyday purchases is one of the biggest insights from our Key Thinkers Scholarship Winner, Samantha, who worked hard to balance her budget during her freshman year of college. Just as some people set New Year’s resolutions focused on education, Samantha used her budget to be able to afford tuition.
Once you have a budget in hand and spending habits to quit in mind, you may want to scroll through our blog, too. It’s full of savings tips for everyday life, like how to lower your pet care costs, save money on your energy bills, or reduce what you spend at the grocery store.
This last post may inspire you to create a meal plan, shop from generic brands, compare prices, and use couponing apps all in the name of your budget. These are examples of measurable and attainable steps to lower your food bill. As you commit to more of these habits, you’ll most likely have more money to put towards savings.
This next step builds on what you’ve set out in the Specific and Measurable stages. It makes you ask yourself if this particular goal and its measurable tasks are relevant for your life.
In other words, you need to evaluate the likelihood that you’ll stick to the plan you’ve created. If you’ve used our savings guide and blog to figure out how you may cut down on your spending, be honest with yourself — are the sacrifices realistic?
Let’s look at saving at the grocery store as an example. You’ll want to ask yourself:
If the answers are no to either of these questions, you have two options:
It’s always a good idea to revisit this step throughout the process to make sure your S.M.A.R.T. goals are on the right track.
Imagine this: your kitchen’s a mess, you have laundry to do, and clutter to clean up all around the house. Although you may not enjoy how untidy your home looks, you may not jump to complete these chores. Maybe you’re tired after a long day at work and driving the kids to soccer practice, so you promise to do these chores tomorrow. And that turns into the next day. You get the picture.
Now, imagine the same messy house, but this time, you’ve just been told your in-laws are coming to visit on the weekend. A half-hearted pledge to do it tomorrow is no longer good enough. With a timeline set for the weekend, you now know you have to clean up by the time your in-laws are set to arrive.
A timeline or deadline often makes you work harder than if you didn’t have one at all. When you have a limited time before you’re supposed to reach your goals, you’ll have to prioritize your tasks, so you only focusing on the things that matter.
A deadline is only effective if it’s realistic. Make a mini due date for each of the smaller tasks you outlined in the Measurable step that help you reach the final deadline. Don’t choose this last deadline at random; pick something that makes sense with what you’ve learnt from the steps above.
Once you have a S.M.A.R.T. goal in mind, you have what amounts to a road map for your goal. What’s next involves lighting a little fire to get you to take your first step.
Finding motivation after several weeks of failure may not always be easy, even when you have a route marked out for your success. If you’ve lost your momentum, you only need to find new ways of inspiring yourself to start this journey towards financial wellness.
Below are two motivation methods that may give you the push you need:
Contracts are a normal part of the financial world. They’re drawn up and signed everyday.
Here at MoneyKey, we use them to outline the rights and obligations of our customers when they take out installment loans and personal lines of credit online. It guarantees how and when we deliver cash loans online, and it binds our customers to the outlined rates, terms, and repayment schedules.
Generally speaking, this is how most lenders operate, but MoneyKey always strives to make our terms as transparent and easy-to-understand as possible. To find out how we do this, check out this article to get more information on online lenders.
As for our lending process, a contract is a legally binding agreement that protects both parties. Failure to meet the terms of a contract results in consequences. For every day you go over your installment loan due date, we’ll apply additional interest — which may increase the total finance charges you’ll pay.
Let’s be honest — nobody wants to owe more than they have to! Which is why financial consequences can be a powerful incentive to meet your obligations.
A commitment contract harnesses a consequence of your choosing to compel you to achieve your goals. It’s kind of like a making a bet to ensure you’re successful. If you fail, whatever you put at stake is lost or damaged. If you win, you succeed at your goal.
A commitment contract may be as formal as one of our cash loan agreements, or as informal as telling a friend about your plans. Here, the shame of telling them when you fail could be incentive enough to keep you motivated.
If you think you’ll need something more regimented than social obligation, you may try using commitment contract apps like Beeminder or StickK. Both require you to pledge small amounts of money towards your goal, which you may lose if you don’t stay on track. They send you reminders of what you put on the line, so you’re more willing to stick with your goal. Knowing that you’ll lose cash if you don’t meet your goal may help you double down and work harder than ever to be a success story.
It’s easy to see money as a black and white topic. Either you’re in the red or you’re not. Either you have savings or you don’t. Either you need to get your payday loan online or not.
Now, when it comes to financial New Year’s resolutions, it’s easy to apply this same all-or-nothing attitude to your goals. Succeeding and failing are the only two options; if you don’t meet all of the mini-steps outlined in your S.M.A.R.T. method breakdown, then you aren’t achieving what you set out to do.
A negative state of mind can really end up harming your chances of success. It may leave you feeling demoralized or inadequate when you don’t hit your target, and these negative emotions may cause you to give up on your goal too soon.
If you miss a savings date or spend more money on things you don’t need, don’t dwell on these mistakes. Break through these negative thoughts. See them as a learning opportunity. If you see where you went wrong, you may discover what you need to do to avoid this from happening again.
The important thing is not to give up. Even if you fall short of a target, you’ve still accomplished something. Giving up is the only true failure.
Henry Ford once said, “failure is simply the opportunity to begin again, this time more intelligently.”
This is an important piece of advice whenever you’re planning to make a big change in your life. At the end of the day, you’re human, and it’s normal to slip up every once in a while. Your mistakes aren’t just a record of your failure but an opportunity to learn how to do better next time and every other time you fail again.
So if you’re kicking your heels on important financial New Year’s resolutions, S.M.A.R.T. goal setting and finding the right incentives to keep you going may be what you need to begin again more intelligently.
It doesn’t matter if you lose motivation in February like so many goal setters or half-way through the year. Check in with these tips any time you feel like your goals are getting off track. And remember, if it’s not goal setting advice you need but practical financial assistance, give us a call today to learn about how we may help you with an unexpected expense.