With the new year underway and the holiday season behind, many people find this an ideal time to reassess their finances. After spending on gifts and travel, it’s not uncommon to feel motivated to set new money goals for the year ahead. A survey conducted by the Pew Research Center in January 2024 revealed that 61% of Americans who made New Year’s resolutions had a money-related goal. If you’re one of them, you’re not alone.
However, while the initial enthusiasm to solve all your financial concerns can be strong, daily life often interferes, and resolutions can easily fall by the wayside. Most people experience a cycle where their well-intended financial goals are eventually forgotten amid other pressing matters. So, what can you do to improve your chances of success and avoid that fate?
Prioritize High-Impact Financial Tasks
A common first step for many is to reduce unnecessary spending, which is helpful, but there are other financial tasks that can make a more substantial difference. Taylor Schult, a certified financial planner and founder of Define Financial, suggests starting with some of the less obvious but highly effective actions.
For example, freezing your credit can protect you from identity theft. This process is free, and you can easily lift the freeze when you need to apply for credit. Schult also recommends looking into umbrella insurance, which provides additional coverage beyond your regular policies for auto, home, or renters insurance. It offers protection in case you’re sued, helping you avoid significant out-of-pocket costs. Another key step is basic estate planning. While creating a will may seem like something to put off, not doing so could cause significant stress for your loved ones if something were to happen to you unexpectedly. Schult advises addressing these matters sooner rather than later.
Align Your Goals with What Matters Most to You
A lot of financial goals come from external pressures, like the societal expectation to buy a house or save aggressively for retirement. However, it’s important that your goals reflect what matters to you personally. If you’re happy renting, there’s no need to prioritize saving for a home. Similarly, if saving for retirement feels overly restrictive, consider adjusting your approach to include more immediate financial goals that feel rewarding. Money goals should support your overall happiness and well-being, not just adhere to societal standards.
Eric Roberge, a certified financial planner and founder of Beyond Your Hammock, advises starting with your values. He suggests using those values as a guide to help you set specific financial goals that align with what you truly care about.
A helpful way to structure your goals is by planning ahead for expected costs in the coming year. Think about recurring bills, upcoming vacations, or potential home or car repairs. By setting aside money each month for these anticipated expenses, you can avoid surprises and stay on track with both short- and long-term financial goals.
Hold Yourself Accountable
It’s easy to let goals slip, especially when life gets busy. To prevent this, it’s important to track your progress regularly. Writing down your goals—whether on a handwritten list on your fridge or as digital reminders on your phone—can keep them front and center. For tasks with specific timelines, setting clear deadlines can help you stay focused. Consider breaking your goals down into weekly, monthly, or quarterly tasks, and update your list as you complete them.
Accountability is also a key factor in sticking to your goals. If you’re working with a partner or household, consider holding regular money meetings to review progress and discuss financial matters. Alternatively, sharing your goals with a trusted friend or family member can provide an extra layer of motivation. As Schult points out, while we may not mind letting ourselves down, we tend to feel more motivated when others are involved.
Embrace ‘Done’ Over ‘Perfect’
Perfectionism can hold you back from making decisions, especially when it comes to selecting things like a high-yield savings account, credit card, or investments. However, waiting for the perfect option can lead to inaction. Sometimes making a decision that is “good enough” can be more beneficial than spending too much time on the perfect choice.
Roberge, who acknowledges his preference for optimizing every financial decision, advises against getting stuck in perfectionism. He believes in balancing decisions and not letting one area of your finances consume all your time or energy. “Everything in moderation” is his guiding principle, as he stresses that focusing on balance allows for sustainable long-term progress in all aspects of life.
By prioritizing the right tasks, aligning your goals with your values, holding yourself accountable, and accepting imperfection, you can improve your odds of making meaningful progress with your finances in the new year.
