How to Make Realistic Financial Resolutions
At the end of the year, it’s natural to reflect on the year that just passed. This can lead to some serious thoughts about the upcoming year and what you hope to accomplish. The thing is, most people fall off from their New Years resolutions by the end of January.
It isn’t because they don’t want to reach these goals, but they may not have been realistic or we might not know how to reach them. When we create goals that are unrealistic, they are less likely to get accomplished. It’s important to create goals and create steps to reach those resolutions.
This allows you to set big resolutions for 2019 and actually reach them by the end of the year. Follow along as I map out how I set my New Years resolutions for my finances.
Step #1: Reflect on the previous year before you make new resolutions
It can be easy to jump into writing out resolutions for the new year. It’s exciting and I totally get it! But, if you don’t reflect on the previous year, you are potentially setting yourself up for failure. You need to look back on the previous year and see how you did, where could you have improved, what do you want to focus on in the new year?
By taking the time to really look at actual numbers and where you want to be in a years time, it’s easier to create new goals. For example, in the new year, I want to pay off my private loan. I know this is realistic for me because it is the amount I’m able to pay off in a years time in the previous years. Without this information I would be shooting at a goal that might not be realistic for me.
Once you have seen everything you accomplished in 2018, it will be easier to create goals for the new year.
Step#2: Create your resolutions for the new year
Keeping in mind what you were able to accomplish in the previous year, create your new resolutions based on what you want to accomplish in a years time. Was there an area that you hope to improve in, in the new year? This might be something you focus on improving.
Be specific in your resolutions and what you want to accomplish. Do you want to increase your income, by how much? Do you want to increase your income streams, by how many? Do you want to cut your expenses, by how much? Do you want to increase your savings, by how much?
You also need to look at long term goals when creating your resolutions for the new year. Keep in mind your 5 year, 10 year, and so on goals and make sure your goals for the year align with them. I’m a strong believer in backtracking your goals and your yearly resolutions are no different. I’ll get into this more in the next step though.
Step#3: Backtrack your resolutions to be successful
Once you have your resolutions made, you need to backtrack to smaller goals. What I mean by this is you need to take your year resolution and break it down into 6 month, monthly, and weekly goals. I would recommend doing whatever you think you need to be successful.
For me, I know I need monthly and weekly mini resolutions or tasks to make sure I reach my bigger resolution at the end of the year. This would mean breaking down your resolutions into smaller tasks. For example, if you want to put the max yearly amount into your IRA, take the yearly amount and divide it by 12, then create an automatic transaction to happen every month to reach this goal effortlessly by the end of the year.
This strategy can be applied to any resolution you have. Just create smaller tasks and goals to reach every month to make sure you are successful by the end of the year.
Step#4: Create a place to track your resolutions
For me, I need visuals to see how far I’ve come from the beginning. Otherwise I get really down when things aren’t moving like I want them to. By having a space to see my progress, it gives me the motivation I need to keep at my resolutions.
This needs to be personal for you, some people might be motivated simply by an Excel spreadsheet, others might be by pictures to color in. Figure out what works for you and create it to rock your resolutions!
Step#5: Rock your resolutions and adjust as needed
The key to reaching resolutions is to constantly be reflecting on your journey to reaching them. If you find yourself getting off track, maybe create a weekly goal that will help you reach your monthly goals. Sometimes resolutions can get overwhelming, but when they are broken into small, weekly tasks, they are more manageable.
This also means to adjust if you reach your resolution early. This is such a great feeling when you reach your resolutions before the year is even close to ending. My advice is to see how much further you can take your resolution. Keep pushing yourself to reach new resolutions as you cross them off. Comment below all of your resolutions and lets keep each other accountable to make this year great! I’ll be sharing my resolutions and my progress to my email subscribers, I’d love to have you join me there 🙂