How to set financial resolutions and stick to them

After another rollercoaster of a year, it’s time to embrace the fresh start that 2022 has to offer and think about setting some money-related New Year’s resolutions.

According to statistics, nearly two thirds of us are considering a financial resolution for this New Year. Fidelity Investments’ Annual Resolutions study reveals the top financial resolutions for 2021 included saving more money, paying down debt and spending less.

As important as setting resolutions can be, it’s vital to keep your targets realistic so that you can also stick to them. Approximately 80% of people who make New Year’s resolutions drop them by the second week of February. So how can we make 2022 the year we stick to our financial goals? And what has stopped us before?

When setting new financial goals, we need to be prepared for challenges along the way, especially in a time of so much uncertainty.

The key is to set realistic targets and remind ourselves why we made the resolution when we are tempted to give it up – there’s a reason we spend so much time identifying and understanding the “why” behind it all when we begin working with a new client. Nobody makes resolutions or changes in their lives just for the sake of it. Make sure you understand your real purpose and let that drive you. Once you understand where you’re going, you can then work out the steps to get there.

Don’t go at it all at once. You wouldn’t decide to take up running for the first time in your life and then start with a marathon.

Using SMART goals is a great way to set yourself up for success. It’s likely you’ve heard of these before, but in case you haven’t: SMART is an acronym that stands for Specific, Measurable, Attainable, Relevant, and Time-Bound. It’s used to guide goal and objective setting, to ensure they are clear and reachable. Any goals you make should be measured and plotted against each of the categories in SMART. This method gives a sense of direction and helps us organise and reach our goals.

Breaking a bigger goal down into smaller steps, setting monthly targets, and creating new, healthy habits can make it more attainable and easier to stick with. For example, if you’re aiming to save 20% of your income by the end of the year, you might start by saving 1% in January and then increase this to 3% in February, then 5% in March, and so on. This can feel more manageable and allow you to see results more quickly. The human brain is set up on a rewards system – when you see evidence of results, you’re more likely to stick with it to achieve further results.

OpenMoney recently shared this really good infographic showing how scaling down a money goal into bitesize pieces and making it an embedded habit throughout the year can have far bigger results than you might imagine. The figures may need scaling up for your needs, of course, but the principle stands. This is actually a great one to share with your children or grandchildren to encourage good saving habits – perhaps you could offer to top it up to a nice round €1,500 if they achieve it?

It can be helpful to maintain a checklist to keep track of your progress throughout the year. This way, you can make necessary modifications to make sure you reach your targets if you start to slip up, and catch yourself while it’s still relatively simple to course-correct.

It’s said that it takes 90 days to make or break a habit, and this is no different when it comes to financial habits. You may have been a spender your whole life and therefore saving may feel completely alien. And to revisit our running analogy, if you’ve never run before you will have to gently train your way up to each milestone. Be patient with yourself and accept that it will take time. There might be slip-ups along the way, but as long as your goals are achievable and your vision is focused, you will get there in the end. There’s a good reason our motto is #StickWithThePlan – it’s the only way to get results.

If your New Year’s resolution is financial and you don’t yet have a financial advisor, organise a chat with Metis Ireland in 2022 and meet our incredible team of financial experts. We will be more than happy to meet with you, review your goals and help you make a long-term, realistic financial and lifestyle plan.

And, above all else, remember what your money is meant to fund: moments of meaning.

Kasia Preising
Client Services Executive