Fidelity Investments® released their fifth annual study on financial New Year’s Resolutions and found that 54% of Americans (an all-time high) will consider a financial resolution for 2014. The most popular resolution by far was to save more money next year, primarily for long term goals like retirement or college.
Unfortunately, almost a third of respondents stated that in relation to other popular resolutions, such as exercising more, quitting smoking or finding a new job, financial resolutions were more difficult to keep.
“Our research and many years of experience have shown that Americans have a need in three areas, which would allow them to better attain their financial resolutions,” said Ken Hevert, Vice President, Fidelity Investments. “They are calculating the benefit of keeping their resolutions, having a reward for reaching their goals, and breaking down their resolution into smaller, more attainable short-term goals.”
If you struggle with sticking to your financial resolutions, here are a few tips to keep you on track:
1) Create a year-long action plan – Hevert recommends creating a series of monthly goals that move you closer to your resolution. This breaks down your resolution into shorter, simpler goals and allows you to feel confident in your progress. “It’s also a helpful tool to help you stay optimistic about sticking to your resolution throughout the year,” Hevert says. “If you fall off track in March, you know how to make up for it in April.”
If you need some guidance creating a plan, Fidelity has an online annual roadmap. Start the year by revisiting your budget in January.
2) Reward yourself properly – As you progress toward your goal, it might be tempting to reward yourself by spending. While that can provide instant gratification, it may set you farther away from your goal and create a habit for frivolous spending. “Your reward is financial peace of mind,” says Hevert. “Stay focused on satisfaction of your accomplishment and how you’ve benefitted from keeping your resolution.”
3) Make it a team effort – One of the most powerful ways to reward yourself is with affirmations from people you love. According to Fidelity’s fourth annual Couples Retirement Study, the top piece of advice long-time couples had for newlyweds was to make their financial plans together. “Making your financial resolutions with your spouse, partner or family holds you accountable for your progress towards that goal,” says Hevert. “Being able to share your accomplishment with them can be a powerful motivator towards financial success.”
4) Use automatic payment programs – Automatic payments or increases to your investment contributions can take the emotion out of saving more money. Hevert says, “Increasing your contributions by 5-10% can be daunting at first. But by gradually increasing what you put away with automatic payments, you might not even notice the difference.”
5) Revisit your investment balance – Because of recent economic volatility, people have become more conservative with their funds. “If all you are doing to reach your goal is putting away cash, you’ll have to save a larger portion of your income to meet that goal,” says Hevert. “Adjusting your investment portfolio to include the right blend of stocks, bonds and cash can get you closer to your financial goals without contributing additional funds.”
Photo credit: Getty ThinkStock and Fidelity Investments