Updated on 12.30.07

How to Define and Stick To a Successful New Year’s Resolution, Financial or Otherwise

Trent Hamm

Almost every year, I define a handful of New Year’s resolutions for myself, as do many people around the world. The new year provides a proverbial “clean slate” – the turning of the calendar year provides a very clear psychological place with which to work on life changes we’d like to make.

The problem is that most New Year’s resolutions fail. There are a lot of reasons for this, some of which we can control (like stating a realistic and clear resolution) and some which we can’t (a life change out of our control). If you truly want a resolution to succeed, though, the best way to do it is to eliminate the reasons against it that you can control and protect the resolution as much as you can against the factors that you can’t control.

Here are ten steps to building a very strong New Year’s resolution that you can keep.

1. Don’t set a lot of resolutions.
In fact, I don’t recommend setting more than one. If you set a lot of them, you lose focus on individual resolutions, making them hard to achieve. I would focus on tackling the one thing in your life that bothers you the most and focus on a resolution that helps to fix that problem.

2. A resolution is almost always part of a longer-term pattern you want to establish – figure out what that pattern is.
If you’ve decided to invest this year as part of your resolution, it’s part of a bigger pattern. Maybe you want to reach a greater state of financial stability right now. Maybe you want to bump up your savings for retirement. Maybe you’re just going to save for a new house. Whatever it is, your immediate resolution is just a strong first step towards that bigger goal. The same goes for a health-related resolution, a personality-related resolution, or so on – you’re hoping to cause a bigger change in your life. Understand what that change really is and keep that big picture in mind even as you make little steps.

3. Give yourself a timeline within the resolution.
You might be planning on setting a goal related to investing, which is a laudable goal but very vague and easy to forget about. Instead, state that you’re going to invest a certain amount each month. Take your resolution of “I’m going to invest this year!” to “I’m going to invest $200 a month this year!”

4. Make the resolution as specific as you can.
Transform your resolution into a plan. That means filling in as many details as possible. Take your “I’m going to invest $200 a month this year!” into “I’m going to contribute $200 extra to my 401(k) this year and put that money solely into stocks in an effort to grow my balance quickly and head towards retirement faster.”

5. Make sure your resolution is achievable.
Quite often, people bite off resolutions that they can’t chew. If you’re resolving to save $500 a month and there’s simply no way your budget can afford that, cut down your target substantially. Similarly, if you’re resolving to lose a ton of weight, look at what’s realistic and cut things down a bit – if you improve your likelihood of success by taking small steps, then go that route.

6. Make sure you understand the regular actions you have to take to achieve the goal.
If your goal is related to saving, realize that the money you’re going to save has to come from somewhere, likely regular, good financial moves. You’ll be making lots of small choices during the day – not buying stuff at the store, avoiding an expensive morning coffee, and so on. Similar truths exist for other resolutions: with weight loss or healthier living, you have to make a choice to exercise and you also have a choice to make each time you eat a meal. Recognize those small choices and keep them constantly in mind.

7. Make sure there are tiny, discrete steps within your resolution.
Every single day, there should be something simple and small you can do to move towards your goal. Make sure you know what those steps are and take them over and over again. For example, with a financial resolution, your daily step might be to not stop and buy a morning coffee and not stop at the bookstore each Tuesday. Taking these little daily steps will make achieving your bigger resolution much easier.

8. Automate as much as you can.
If your resolution is financial, automate it. Make the investment automatic – sign up with your banking or financial institution to automatically deduct the money and have it directed to where you want it to go. It’s harder to do this with other resolutions, but it can be done to some extent – just completely eliminate unhealthy foods from your cupboards, for example, so that your choices at home, no matter what you choose, are automatically healthy.

9. Make sure to check on your progress regularly and frequently.
Your resolution should be filled with mini-milestones that you can check in on as frequently as possible – weekly, at the very least. You can check your weight weekly, your account balances weekly, and so on – the whole point is to make sure that you are seeing success, and you can then use that progress as evidence that you are making positive forward progress.

10. Don’t succumb to “rewarding” yourself via actions that undermine the resolution.
It’s fine to celebrate your success, but make sure that your celebration doesn’t undermine your goal. If you’ve lost ten pounds this month, don’t celebrate with a Sara Lee poundcake – celebrate by buying a new clothes item that fits your thinner shape. If you’ve achieved a savings goal, don’t go out and buy a bunch of stuff as a reward – instead, just take a few hours to do something else that you consider fun (for me, I’d spend an evening playing a Wii game, for example).

Doing these things, with any resolution, will drastically increase the chances of success. Good luck!

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  1. I would also share your resolution with people who will hold you accountable. Last year I told my friends and family that I was giving up caffeine. I succeeded because I am usually around one of them when such drinks are available. This year it is time to get in shape and lose the spare tire.

  2. Mrs. Micah says:

    Congrats on giving up caffeine, Saving Freak! I kicked my Coke (cola, not the drug) addiction a few years back and it was insanely hard.

    Number 11 might be “Don’t make them at New Year’s. You don’t have to resolve something just because it’s January 1st. Instead, consider making resolutions at times which fit your needs. If the time is now, Jan 30th, then don’t think of them as something for the New Year. (Unless you’ve had good results with NYRs in the past.) Otherwise you’re setting yourself up for a repeat of previous failures by framing it as something so similar.” My $0.02.

  3. Geoff says:

    Agreed, I’ve often heard that the best resolutions are SMART…Specific, Measurable, something you can be Accountable for, Realistic and Timebound. This was a nice application/expansion of this thought. Long time reader, first time commenting.

  4. Jennifer says:

    GOOD addition, Mrs. Micah! I’ve got a plan to make one resolution a month for the new year. Some of those are the establishment of simple habits, some are one-shot deals (get that holiday closet cleaned out before I dismantle the tree!), etc. So there will be plans enacted on Tuesday but only because it’s the first of the month.

    I’ll be reading through this post very thoroughly for help in establishing my monthly goals!

  5. I have never been a fan of New Years resolutions – why limit yourself to setting improvement goals to once a year? At any rate, the above are good tips for succeeding in accomplishing your resolution (no matter when it was set)!

    Best Wishes,

  6. Marina @ Sufficient Thrust says:

    Don’t forget to plan ahead and have adequate motivation to help carry you through the temptation to fall off the wagon. If you’re paying down debt, it might even be a cool idea to Photoshop a credit card statement to say “Balance: $0” and hang it up on the wall.

  7. luvleftovers says:

    I never make resolutions. I make PLANS!

  8. New Year’s is the only holiday that celebrates the passage of time. Perhaps that’s why, as the final seconds of this year tick away, we become introspective. Inevitably, that introspection turns to thoughts of self-improvement and the annual ritual of making New Year’s Resolutions. New Year’s Resolutions offer the first of many important tools for remaking ourselves.

    The most important investments require time. Setting and achieving a resolution requires focus, effort, and commitment. Changing old habits and developing new ones won’t happen overnight.

    It makes sense for all of us to follow the ten steps to building a very strong New Year’s resolution that you post.


  9. I always have stop smoking on my new years resolution but it never happens.

  10. Ahh….

    This year, my new resolution is to be more patient. I play a lot of online poker so I need it. nice post

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