Small Steps
By Kevin Gibbons
The New Year is the recognized time for resolutions, starting new endeavors or finally tackling the challenges we have identified. A 2022 YouGov poll shows that 37% of Americans had resolutions. A Forbes poll found that the typical resolution lasts about 3.75 months.1 How can you make yours last longer? The whole year, or even the rest of your life?
Throughout 2024 we’re going to be talking about how to make meaningful, lasting changes in how you think about and handle money, to spend less than you make and to save on the things that are less important to you so you can spend on those areas that are more important to you. Before we get started on the detailed tools and habits, we need to discuss some key goals and viewpoints.
Any change in behavior can be overwhelming, or at least very challenging. How do you get started and maintain the momentum? There are two key ideas to keep in mind when creating and following through with resolutions.
Be specific in your goals. If you want to lose weight, don’t say “I want to lose weight.” Say “I want to lose 20 lbs in 6 months.” If you want to increase your fitness, it’s not “I want to be more fit.” It’s “I want to be able to do 20 push up in one minute and run a mile in 7 minutes by June.” What defines a good goal? It is specific and easy to measure, has a schedule and is reasonable to accomplish.
Break it down into manageable, achievable steps. We all want to be debt-free, able to buy the things we want and save enough for our future. But if we just define our goals by those end results, they can seem so far out of reach that it feels like there is no reason to even try. You have to look at these changes as incremental steps.
So, what does a workable personal finance resolution look like?
It starts with defining what you really want to accomplish in the next 12 months. Maybe you cannot become completely debt free in one year. That’s OK. Can you pay off one credit card, or reduce your total debt by some fixed amount? What can you reasonably accomplish in a 12-month period? Stretch goals (challenging but achievable) are fine. Unrealistic goals will just be demoralizing.
Next, break it down into steps that are also achievable and measurable. If you have never done any exercising or running, trying to run that 7-minute mile the first time would be a mistake. If you didn’t hurt yourself, your initial effort would probably be so far from your ultimate goal, that you could likely just give up. You start by walking a mile, then walking a little quicker, then jogging for 30 seconds, then mixing walking and jogging as you slowly build up your muscles and stamina.
It's the same with changing your money habits. Start slowly, with measurable changes and slowly improve. Throughout this year, we will be sharing the habits and tools to change your behavior around personal spending and saving. At each step, we will be talking about the incremental changes you make, that will stick with you for the long term.
To go back to the diet analogy, we’re not trying to get you on a crash diet so you can fit in the outfit for a spring wedding. We are looking at changing the way you eat so you will be healthy and happy for the long haul. The habits you will learn will be sustainable for many years.
We look forward to starting this journey with you and continuing it for the next 12 months.
1- https://www.forbes.com/health/mind/new-years-resolutions-statistics/
