7 Tips to Create Better Financial Resolutions for 2024

At the beginning of a new year, many people make financial resolutions. If the last 12 months weren't all you hoped they would be, this is your chance for a fresh start.

Unfortunately, those financial goals can fall by the wayside pretty quickly. Research suggests that 23% of Americans quit their resolutions within the first week—and only 9% of those who make resolutions actually complete them.¹ However, you can be among the elite who achieve their New Year's financial resolutions by utilizing these seven strategies.

1. Set Realistic Goals

Setting overly ambitious New Year's resolutions can be a common pitfall, especially when it comes to money management.

For example, maybe you struggle to save money each month due to inflation. So on January 1, you vow to stash away a whopping $10,000 by December. It's a great goal, but is it realistic? If your current financial situation and past saving habits don't align with such a significant leap, you might be setting yourself up for failure.

While there's nothing wrong with aiming high, give yourself the flexibility to adjust your goals. Start with realistic objectives—especially ones you believe you can accomplish early in the year—to maintain your motivation for 365 days.

How to know if your goals are realistic? Ask yourself a few questions:

• • How much time will it take to achieve this goal?
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• • How much sacrifice will it take to achieve this goal?
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• • Can I easily incorporate this goal into my daily life?

Your answers will reveal if you're reaching for a financial resolution that's attainable.

2. Be Specific With Your Goals

Setting vague goals can be just as unhelpful as setting unrealistic goals. For instance, you may say you want to make more money, but how do you plan to make that happen? Will you look for a new job, negotiate a salary increase or dive into the world of investing?

Wishy-washy goals can make it challenging to track your progress and stay motivated. On the other hand, if you tell yourself you're going to deposit $1,000 into a certificate of deposit (CD) by June 1, now you're getting somewhere.

3. Develop a Concrete Plan of Action

You can't just wish upon a star and expect a dream to magically come true. As the old adage goes, "Failing to plan is planning to fail."

To boost your chances of achieving your financial goals—especially if they're big, like saving for a house, car or dream vacation—it's crucial to make a plan. Think of it as creating a road map for the entire year, from January to December. Whether you're aiming to pay down debt or bolster your retirement savings, this road map can help keep you on track.

Setting SMART goals (Specific, Measurable, Achievable, Realistic and Time-bound goals) is a good place to start. Consider it your GPS to guide you to a desired destination. Here's an example:

• • Specific: Be crystal clear about your goals. Instead of saying, "I want to save for my dream trip to Europe," be specific: "I will save $400 per month for one year in my high yield savings account." Specific goals are easier to chase and achieve. You can use our savings goal calculator to help set SMART financial goals.
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• • Measurable: Find a way to track your progress. For example, you could use the bucketing system and funnel that $400 per month into a separate “vacation fund." That way, you can easily see how close you are to reaching your goal, and resist the temptation to spend your savings elsewhere.
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• • Achievable: Your goals should be challenging but doable. Look at your budget and make sure you can actually afford to save that $400 each month. Challenge yourself without overstretching your finances. Your goals should be ambitious but not impossible.
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• • Relevant: Consider your age and stage. If you just bought a house, saving $400 monthly might be a stretch right now. A more realistic plan could be to save $200 per month over three years, taking your current financial situation into account.
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• • Time-bound: Set a deadline to keep yourself accountable. For instance, commit to saving $4,800 in one year. Having a timeline can help you stay focused, and if you miss the mark, it can prompt you to reevaluate your strategy and make necessary adjustments.

The beauty of SMART goals is that they force you to be concrete, focused and accountable—and to write down exactly how you intend to reach your financial goals.

4. Create a Detailed Budget

When it comes to setting and achieving financial goals, creating a budget is your BFF. A detailed budget helps you decide if your goals are realistic, and it can help prevent overspending. Without a budget, it's easy to lose track of your money, making it challenging to stick to your resolutions and possibly leading to financial fails.

For instance, you might pledge to wipe out $5,000 of credit card debt by December, making a monthly payment of $420. But a zero-based budget that tracks your income and expenses (both fixed and variable) may reveal that you can't afford to allocate $420 monthly toward paying off that debt. It might mean adjusting your goal to a more realistic $300 per month.

So before you get busy making promises to yourself, spend the early weeks of the year exploring budgeting apps and organizing your income and expenses. This sets the stage for better money management throughout the year.

5. Adjust for Major Life Changes

Just had a baby? Or maybe you just got your first mortgage? Make sure your financial resolutions take your new circumstances into account. For instance, if you're suddenly spending a small fortune on diapers, you may not have it in the budget to double what you're putting away for retirement. You may, however, want to set up a 529 plan for your child's future college education.

6. Consider Your Behavioral Patterns

Take a moment to shine the spotlight on your saving and spending habits—and make changes accordingly. Ignoring your true saving and spending behavior can lead to repeating past money mistakes, like overspending or inconsistent saving.

For example, if you tend to procrastinate or forget deadlines, consider setting up an automated savings plan that makes regular deposits into your retirement savings account or emergency fund. Or if impulse shopping is your downfall, come up with a detailed plan to curb those splurges. For instance, you might create a rule whereby you don't buy anything until you've had 24 hours to think it over, or until you've already paid off your monthly credit card balance.

It's tough to set achievable goals when they don't match your real life. Your money habits can either help or hinder your financial resolutions, so it's worth scrutinizing them so you can stay on track.

7. Find an Accountability Partner

While not all financial details need to be aired publicly, consider sharing your resolutions with someone you trust. It's like having a workout buddy for your financial goals—someone who can offer encouragement and keep your spirits high, especially during times when progress seems sluggish.

You can schedule regular check-ins or even establish joint financial goals with a partner or friend to keep each other on track. Another option is to seek advice from a financial advisor. Whoever you choose, look for trusted people who can offer valuable insights, hold you accountable and celebrate the wins along the way.

The Bottom Line

While setting financial resolutions can be helpful, what you really need is a financial plan to hit the finish line. That means taking a deep dive into your financial past and present, and thinking hard about your financial future. Realistic, specific and measurable goals—anchored within a well-thought-out financial plan—are the building blocks to success.

Embrace the new year with confidence, and get ready to make your financial dreams a reality. Your future self will thank you.

 

Geoff Williams is a finance writer based in Loveland, Ohio. He specializes in consumer credit, personal finance and small business finance. For the last 10 years, he has been writing for U.S. News & World Report, and his work has appeared in publications such as The Wall Street Journal, CNNMoney.com, The Washington Post and LIFE magazine. He also has written several books and writes a classic TV blog called “The TV Professor."

 

READ MORE: New Year Budgeting: Why You Should Create Financial Resolutions

 

 

Sources/references

1. Batts, R. "Why Most New Year's Resolutions Fail." The Ohio State University. Published February 2, 2023.