Around half of people (45%) typically make New Year’s resolutions. New Year’s resolutions often involve something a person wants to improve. Maybe, it’s health or eating habits, maybe you want to quit smoking, or maybe you want to spend more time with certain loved ones. Some New Year’s resolutions, however, involve financial matters. According to research by the University of Scranton Journal of Clinical Psychology published on Statistic Brain, these were the top 10 New Year’s resolutions in 2014:
- Lose weight
- Get organized
- Spend less, save more
- Enjoy life to the fullest
- Get in shape, stay fit
- Learn something new or exciting
- Quit smoking
- Help others
- Fall in love
- Spend more time with family
You may notice how No. 3 on the list involves one’s personal finances. And sure, saving more and spending less is great. But, is this resolution a good one? Will people keep this resolution? Probably not. In fact, Scranton research shows that only 8% of people actually achieve their New Year’s resolutions, whatever they may be.
Why? Well, New Year’s resolutions are in essence goals. And, like all goals, they should be S.M.A.R.T. You know, specific, measurable, attainable, realistic, and timely. According to research compiled by WebMD, your resolutions are also more likely to stick if you break your large goals up into smaller goals, and take things one step at a time.
Using Web MD research on how to create attainable resolutions, coupled with other resources pertaining to meeting goals, we’ve created a list of some of the worst financial New Year’s resolutions. Have you ever made a resolution similar to the ones on this list? Did you keep it?
1. To pay down debt
Nerdwallet reports that the average household that has credit card debt holds around $15,600 of it, as of late. With these households holding credit card debt levels that are around 30% of the median annual household income, it makes sense for households to strive to pay this debt down.
The problem with this simple resolution is that it is simply a statement, as opposed to a plan of action. How much debt do you intend on paying off? It’s probably not realistic to expect to pay it all off. Which debts are you going to pay first?
A better resolution would be something more along the lines of this: “To bring my Visa credit card balance down to $300 by March by making additional payments of $100 each month.” This way, you have an attainable goal and a clear path upon which to get there. Remember, Rome wasn’t built in a day — it probably took some time to get into debt and it’ll take you time to get out of it as well.
The same idea applies with financial resolutions that involve saving more or spending less. Your resolution should answer questions like: How much, exactly, do you plan on saving? Over what time period will you save this amount?
2. To get a promotion or to earn more money
Of course, it’s important to have career goals and aspirations. But, you can only control what you do, and your decision making. You may decide that you will “increase your performance metrics by 25% in efforts to be promoted to the lead position and ask for a $10,000 per year salary increase.”
But, simply saying that you’re going to “get a promotion” or “earn a raise” may leave you disappointed when all is said and done.
Aside from the fact that there may not be any promotion available over the next year and there may be other qualified candidates, you should focus on what actions you’re going to take in order to achieve the desired result, as opposed to the desired result alone.
3. To retire at 65
Any New Year’s resolution that requires several years to complete should fall under a 5-year or 10-year plan, as opposed to a resolution. For instance, “I want to get married within the next five years” or “I want to run my own business within the next 10 years.”
Now, this doesn’t mean your resolution can’t be a step toward meeting these types of goals. For instance, a person who wants to retire in 10 years may decide his or her resolution this year is “to place $100 more per month into a retirement account” in efforts to get closer to that goal.