Make the Right Resolutions for Your Wallet This Year!

In this article from ForbesWoman, learn advice on making financial resolutions you can actually stick to.

By Gimundo Staff. Posted on January 19 2011

By Jenna Goudreau for Forbeswoman.com, published on Divine Caroline

With a new year here, many of us have created resolutions: Lose weight. Reduce stress. Save more, spend less. According to psychologists and financial experts, however, the most common New Year’s resolutions are generally unachievable and tough on your wallet. While renewing personal goals is an important step in jump-starting the year, most popular resolutions need to be refined.

“Virtually all ambitious New Year’s resolutions set you up for failure,” says psychologist and researcher Robert Epstein, “but that doesn’t mean you shouldn’t make them. It can motivate you to stretch in new directions. Ideally, you should make ambitious, yet achievable resolutions.”

According to Epstein and others, resolutions so frequently fail or even backfire because they are either too vague to be manageable, too rigid to be sustainable or so narrowly focused that they negatively impact other areas of your life. This year, make commitments that will last and be easy on your wallet.

Don’t Make Vague Commitments
Financial resolutions fail “if the person does not make a behavioral change, or does not identify specific, bite-sized actions that get them on the path towards their goal,” says Bill Druliner, a financial counselor at nonprofit financial organization, GreenPath Debt Solutions.

A resolution like “save more money” is doomed because it is too vague to be actionable. Rather than committing to an idea in the abstract, Druliner advises coming up with a reasonable goal and breaking it down into manageable steps so it’s less overwhelming. Instead of promising to save in 2011, commit to saving a percentage of each paycheck and draw up a plan to make it a habit—like setting up an automatic deposit and deciding which regular expenses to cut.

Another common yet ultimately meaningless resolution is promising to dine out less and make more home-cooked meals. Good for both your waistline and your wallet, this resolution would be beneficial if deconstructed. First, consider the root of the problem. Are you spending too much on work lunches? If so, plan out a variety of options that you can bring from home, and schedule in one day a week that you will go out. This supports the feeling of being rewarded rather than punished.

Stay Away From Rigid Promises
Like unclear resolutions, plans that are too strict will also be too hard to accomplish. Executive coach Michelle Randall warns against making inflexible resolutions. “Willpower only goes so far,” she says. “Because only one course of action is ‘right,’ one failure derails the whole process and smashes resolve.”

For those feeling the spending hangover of the holidays, an obvious resolution might be to stop shopping cold turkey. However, making such a rigid pronouncement is less helpful than coming up with guidelines for how to reasonably shop. For example, resolve to write out and stick to a list every time you go to the store in order to stay on budget. If you’re prone to impulse purchases while window shopping, commit to visiting a mall only once a month and with set amount of cash.

Giving yourself unrealistic deadlines will similarly sabotage your success in 2011. Instead of resolving to secure a new job by February, psychologist Robin Goodman suggests first considering the reality of your industry and the economy to better decipher your options. You may have more luck asking for a raise than trying to change companies. At the same time, resolving to take specific actions–like updating your resume and making two new contacts a week–will give you more control, making it less likely that you’ll give up too soon.

Avoid Financial Side Effects
A good portion of New Year’s resolutions have nothing to do with finances—but that doesn’t mean they won’t impact them. This year, carefully consider the financial side effects of your shiny new aspirations.

After a syrupy December, it’s no surprise that so many people resolve to lose weight in January. However, expensive gym memberships, $100-an-hour trainers or pricey meal plans end up shrinking your wallet. Before you commit to a 12-month gym contract, shop around for the lowest monthly fees. Also, consider creative options for exercising at no cost, like taking the stairs or lifting free weights at home. And before you commit to the latest wonder diet, calculate the additional expense and whether it’s worth it.

Above all, “do it for the right reasons,” suggests Goodman. Becoming too focused on one aspect of your life might impede another or make you so miserable that you quit. If you take a balanced approach to the New Year and set manageable steps toward your goals, you’ll maintain high spirits and a plump wallet in 2011.

Filed under: Business, General Interest,

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