How to Keep Your Financial New Year's Resolutions

Every year, millions of Americans set financial resolutions, aiming to save more, reduce debt, or build financial resources. However, sticking to these resolutions is often harder than it seems. Studies show that while a significant portion of people make New Year's resolutions, very few follow through on them (1). According to Fidelity, Americans with financial goals say they are focused more on short-term objectives like paying off credit cards or building emergency savings than long-term goals like retirement or a child's education (2). Regardless of whether you have long-term or short-term goals, how do you stay on track? Here are a few effective strategies to help improve your success rate.

Use SMART Goals

One key factor in sticking to financial resolutions is setting clear, achievable goals. The SMART framework—Specific, Measurable, Achievable, Relevant, and Time-bound—helps break down general goals into manageable tasks. For instance, instead of saying "I will save money," a SMART goal would be, "I will save $100 every month to build an emergency fund of $1,200 by the end of the year." The more specific your goal, the easier it is to track progress and stay motivated.

Track Your Progress

Regular monitoring of your progress is crucial for staying on track. According to research (3), tracking your progress is among the simplest and most effective tools for improving your results. For example, using budgeting apps or simple spreadsheets can help you stay on top of your expenses and ensure you’re meeting your goals each month.

Write Down Your Goals

Accountability is a proven strategy for success. A 2015 study by psychologist Gail Matthews (4) showed when people wrote down their goals, they were 33 percent more successful in achieving them than those who formulated outcomes in their heads. It also makes you more likely to stay on course when life gets busy, and distractions arise.

Automate Your Savings Plan

One of the biggest hurdles to sticking to financial goals is remembering to take action. Automating savings and bill payments takes the mental load off and ensures that your financial resolutions are met consistently. Successful savers use automatic transfers to put money aside for emergencies and retirement. By automating your savings plan, you remove the temptation to skip a month or simply forgetting to add to your retirement, making it easier to stay on track. (5)

Recognize Small Wins

Financial resolutions can feel overwhelming if you focus too much on the bigger picture. Psychologist Dr. Benjamin Hardy suggests celebrating small wins to stay motivated. For example, if your goal is to pay off $15,000 of debt, celebrate every time you pay off a chunk of that debt. Small wins build momentum and help maintain motivation throughout the year. (6)

Stay Flexible.

Life is unpredictable, and sometimes unexpected expenses or financial setbacks can interfere with your plans. If you miss a payment or don’t save as much one month, don’t give up on your entire goal. Instead, revisit and adjust your strategy. To that end, flexibility is a necessary skill that allows us to adapt to unforeseen changes. (7)

The Bottom Line

Sticking to financial resolutions can be challenging, but with the right strategies and mindset, success is achievable. By setting SMART goals, tracking progress, seeking accountability, and celebrating small wins, you can keep your financial resolutions on track. Remember that even if you face setbacks, adjusting your approach and remaining flexible will increase your chances of achieving your financial goals.