Metis AM
As December draws to a close and 2023 starts to peek over the horizon, you might be starting to think about your new year resolutions. The new year can be a great time to review your finances and set some financial goals for the year ahead.
Thing is, making a new year resolution doesn’t guarantee that you’ll achieve the goal you’ve set. Data from YouGov shows that only 31% of people claim to have kept all of the resolutions they made in 2020. So how can you make it easier to stick to your resolutions and ensure you achieve your goal?
Read on for five tips that could help you to achieve the financial goals you set for 2023 with ease.
1. Keep goals realistic
The new year is often a time of optimism for the 12 months ahead. It’s really exciting to think about all the things you could achieve. Maybe you decide you want to pay off large amounts of debt, or max out your pension contributions to set yourself up for retirement?
Remember, though, that setting overly ambitious targets that are very difficult to manage alongside your monthly expenses could lead to you feeling demoralised if you miss the target.
Smaller habits that are sustainable in the long term may be more helpful for building up your financial wellbeing, because growing your wealth is about consistent, long-term efforts. This is also much more likely to keep you motivated because you can visualise yourself achieving the goal, meaning you are more likely to take action every month and achieve it.
2. Focus on incremental progress
Have you ever heard the phrase “you need to learn to walk before you can run”? It applies to your new year resolutions too!
This advice is somewhat related to tip number one about keeping your goals realistic. Goals or habits that you intend to grow over time are one way to ensure you set goals that are achievable.
Not only do more achievable goals mean that you are better able to complete the task you’ve set yourself, but you will also notice the gains you have made each month, motivating you further to keep going with your resolution.
Incremental goals also leave you some wiggle room for months when your expenses might be higher, for example if you have a birthday or a holiday to pay for.
3. Make it easy to do
Making your new habit as easy as possible to do is one of the key takeaways from the groundbreaking book Atomic Habits by James Clear.
In his book, Clear uses the example of wanting to eat more fruit. He says that if you buy fruit that’s difficult to peel and eat, and store it out of sight in a cupboard, you are much less likely to stick to your plan of eating more fruit.
Conversely, if you buy fruit that tastes great, that doesn’t need peeling, and that you can store within easy reach, eating more fruit every day will suddenly become much easier.
The same is true for financial goals. If you have a savings goal for the year, you can make it much easier to stick to the plan and achieve that goal by using techniques and technology to make it really easy to save money regularly.
You could set up a standing order so that money moves into your savings account automatically every month, or use an app on your phone to round up your online purchases to the nearest pound and save the difference.
4. Remember your why
Another point that James Clear mentions is that you form a habit because you want the reward that you get as a result of the action you take.
For example, getting into the habit of going to bed earlier means that you will wake up feeling refreshed and energised during the day. This positive outcome makes you more motivated to continue going to bed at the earlier time.
The best way to stay motivated to save or manage your money is to understand exactly what you want to do with that money once you have hit the savings goal. In other words, what will your reward be when you achieve the goal?
This is how most financial planners approach questions about how to invest or grow wealth, because it is the most effective way to ensure that your money helps you to create a life you love.
So, whether you want to be in a position to buy your first home, take your family on a once in a lifetime holiday, or simply to be able to eat at your favourite restaurants a few times a month, make sure you have an end goal in mind for your money.
After all, money is simply a tool that allows us to achieve these bigger life goals and live more happily.
5. Keep in mind that unexpected bills will crop up
Even with the best intentions in the world, there are likely to be months when unexpected bills or expenses crop up that you need to prioritise over your savings goals.
The best way to protect yourself against these unexpected bills negatively affecting your savings goals is to build up an emergency fund. Experts recommend saving enough to cover a minimum of three to six months’ worth of expenses. So, if the worst does happen, you have a safety net to draw on.
Get in touch
If one of your new year resolutions is to create a financial plan to help you achieve your goals, we can help. Please email enquiries@metiswealth.co.uk or call 0345 450 5670.
