Although it’s only January, you can already expect to fail at your New Year’s resolutions. It turns out 80% of New Year’s resolutions fail by the second week of February, according to author and clinical psychologist Joseph Luciani. Further, research shows only 8% of people actually achieve them.
The reason, Luciani says, is that all change, even positive change, involves some level of stress and discomfort. And, most people don’t practice the self-discipline necessary to handle the stress and stay motivated. We tend to focus more on making resolutions (joining a gym, eating a better diet, etc.) instead of developing the mindset and habits (waking up early every day, measuring your caloric intake, etc.) necessary for achieving them.
This also explains why you may at times struggle with your financial goals. Good financial habits like budgeting and saving entail a significant degree of sacrifice. Many people unfortunately feel they’ll fail to get to the finish line. According to study by Northwestern Mutual, 21% of Americans are "not at all confident" that they will be able to reach their financial goals.
How can you make sure you’re in the group who actually achieves what they set out to do? Do you need more motivation? Is it just a matter of luck or wealth?
It generally boils down to building self-discipline, just as if it were a muscle. To that end, here are six steps to help you reach your financial goals.
1. Make your goals specific
Many people say, “I want to get into financial shape.” But what exactly does that mean? Do you intend to accumulate a certain amount of money by the time you retire? Or, own a variety of assets? Maybe you want to save 10% or more of your paycheck every year? A specific goal is much more achievable than an abstract one.
This is where a financial plan comes in. The same Northwestern Mutual study mentioned above found around 58% of Americans believe their financial-planning efforts need improvement, yet more than a third of us have no financial plan. A financial plan can help precisely formulate your goals and the steps to achieve them.
2. Think small
Small successes make a big difference. With small initial goals in mind, you’re more likely to get started and see results. Those small victories can help boost your confidence and your motivation. Want to get rid of credit card debt? Pay off your smallest balance first and work your way up. Saving for retirement? If you can’t save the recommended 10-15% of your paycheck, save a lower percentage and increase it gradually. You’ll still be able to benefit from compounding.
3. Track your progress
It’s difficult to stay motivated if you don’t know if you’re moving closer to your goals or falling behind. A measure of your progress also tells you when to adjust your efforts, if necessary. More importantly, the ability to see where you are and how far you’ve come provides a tremendous sense of accomplishment. There are many easy-to-use budgeting and money management apps available to help you keep track of your progress.
4. Share your goals
A way to keep yourself accountable is to tell at least one or more people your goals. That way you feel obligated to someone other than just yourself, as if you have your very own fanbase that wants to see you succeed. In fact, a study at Dominican University found that people were far more likely to accomplish their goals when they wrote them down, rated them, and then shared the information and their progress with a friend.
You can use social media, like posting on Facebook that you plan to pay off your student loans in the next two years, along with updates of your progress. You should also work with a financial adviser. In many respects, a financial adviser acts as your “accountability partner” by helping you implement your financial plan. Consider that a Franklin Templeton study of retirees found that 83% of retirees who worked with an adviser retired on their terms.
5. Be aware of your weaknesses
Everyone has their weaknesses, especially when it comes to money. It could be a penchant for shopping or going out with friends every weekend. That’s okay. The trick isn’t to try to eliminate your weaknesses, but to simply be aware of them. This helps reduce their hold on you, which can prevent you from self-sabotaging your goals.
6. Focus on the positive
The path toward your goals is unlikely a straight line. There will be moments of weakness (see above). Often, life simply gets in the way – a best friend’s destination wedding, unexpected home repairs, a medical emergency. The key is to teach yourself to focus on the positive. Don’t let a temporary setback throw you off course. Remember all the positive financial steps you’ve already made. A habit of optimism will help you overcome any negative challenges that come your way.
