February is Failed Resolution Month

Make Goals Great Again!

Did you make a New Years resolution for 2019? Most likely it has failed by now. Not that I know you personally or anything. But research tells me so.

It’s estimated that 80% of New Year’s resolutions fail. When they fail can vary, but I would guess around February sounds right since it’s tough for most people to do anything new for a month. Myself included.

Most resolutions are usually health or money related. Not surprisingly, I will focus on how to meet money resolutions. Although health and money are related in many ways.

In any case, here is why I think most money resolutions fail and how we can make resolutions that stick.

SMRT. I mean SMART

Most of us know what SMART goals are. It refers to goals that are Specific, Measurable, Attainable, Realistic and Timely. We’ve all seen this acronym many times.

But as with most things money, knowledge isn’t everything. Execution is where people go wrong. Setting SMART goals is the key but I feel most people just gloss over it or aren’t specific enough.

A big reason why most people don’t adhere to the SMART goal philosophy is that their goals really aren’t attainable. An example is someone who makes a goal to earn $100,000 in 2019. While it’s better than a general goal of “make more money”, this goal still has some flaws.

If this person is used to making $50,000 a year, getting to $100,000 a year is going to be tough. You could break it up even further and say the goal is to make $8,333.33 a month. But if the first few months don’t go right, which is likely since the beginning is always the toughest, then they might abandon the goal.

So what’s the best way to use SMART goals for the New Year? You should still make them specific, measurable and have a timeline. But you need to make the first step ridiculously easy.

Momentum is the key

Let’s say someone made a goal to save 20% of their income in 2019. A worthy goal indeed. But if they are currently saving 5%, it will be pretty tough to crank up the savings rate by 15% and not feel shell shocked.

Make the first step easy. Save 1% more for January. That’s it. It sounds stupidly simple but this is where the battle will be won. By the end of January, they will be saving 6%. Do 1% more for February, and repeat until the end of the year.

The momentum will likely carry this person to their goal. Maybe one month they can save 2%. But June is a tough month and they can’t save any extra. There will be ups and downs but by working on finding ways to save just a little more each month this person will get a crash course in being financially savvy.

After the year is up, they might by at a 16% savings rate. Didn’t quite get to 20%. So is the goal a failure? Absolutely not! Because you can do the same process for the following year and easily get to a 25% savings rate.

All from the first initial easy 1% savings increase. Momentum is a real thing and putting too much pressure on yourself too quickly greatly decreases the chance of hitting your financial resolution

The Big Picture

As humans, we tend to overestimate what we can accomplish in a year. But we also greatly underestimate what we can accomplish in 5 years.

This is essentially the problem with goal setting. We set our sights too high to achieve a short term win. But if we take smaller steps and are okay with stretching our timeline just a little bit, momentum will help carry us to our goals.

Let’s not make February the month where goals come to die for The Broke Professional readers. Just recalibrate them and keep on moving forward.

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Comments

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