At the start of 2021, you may have vowed to pay down debt, boost your credit score or build an emergency fund. Perhaps you're still going strong with these financial goals, or perhaps you’re starting to lose your momentum. Maybe you've surrendered altogether.
If you’re in any of these boats, rest assured that you’re not alone. According to a study by researchers at Scranton University, only 19% of people keep their resolutions, and most give up by mid-January. There are a lot of reasons why we fail at our resolutions, and usually, it has nothing to do with our willpower or lack thereof. One common reason we’re unsuccessful is that we don’t give ourselves clear paths to achieve the lofty goals we’ve set. Sometimes, all you need to triumph is to simply reframe your approach.
Last updated: July 8, 2021
1. Goal: Pay Down Debt
Why it's hard to do: “Debt can be overwhelming, and many people don't even know how much debt they have so tallying it up and organizing all your bills can feel insurmountable,” said Steffa Mantilla, certified financial education instructor, Money Tamer. “Then once you do know how much debt you have, there are conflicting thoughts on debt payoff strategies and whether you should even pay your debt off or keep it.”
How to do it better: “Commit to taking an hour listing all your debts in a spreadsheet, then list them from the smallest debt to the largest debt,” Mantilla said. “By focusing first on paying off the smallest debt, you'll get to a 'win' faster. You'll likely be able to pay off a few small debts before getting to the larger more daunting amounts. These smaller wins will give you the motivation to propel you through the larger debt payoff amounts.”
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2. Goal: Stick To a Budget
Why it’s hard to do: “As we’ve seen this past year, life is unpredictable and creating a budget can help safeguard you from some of the uncertainty,” said April Schneider, head of consumer and small business products at Bank of America. “But, if you set a rigid budget and never change it, it may not remain relevant from one month to the next as your income and expenses fluctuate. Even more so, when it is safer to travel and dine out without restrictions, your spending habits may look different and you may find yourself spending more than anticipated in certain categories.”
How to do it better: “I recommend routinely adjusting your budget to maintain its effectiveness and using a rewards credit card that matches your spending habits to help you stay on track with your financial goals.”
Christopher Stroup, a financial advisor working for Abacus Wealth Partners, suggests handing some of the chores of budgeting over to software to see better success. “Some of our favorite resources, such as Mint or You Need a Budget, allow users to link all of their accounts into a central financial hub,” Stroup said. “From there, the software can suggest a budget given your historical spending. One of my favorite tricks is to teach the software to recognize certain expenses and put them in the proper budget category I have created. Moving forward, this saves me a tremendous amount of time as I no longer have to itemize my expenses by placing them in the appropriate spending bucket. The software does this for me, which gives me more time to understand where I met (or missed) my budget goal for the month.”
3. Goal: Save More Money
Why it’s hard to do: “Saving more money is harder than it sounds because it’s nothing more than a dream,” said Mark Henry from Alloy Wealth Management. “We have to take the concept of saving money from a dream to a goal with a deadline.”
How to do it better: “Pick a deadline for saving more money, write it down and then tell your family and friends what you hope to accomplish,” Henry said. “For example, you can say I want to save more money this year, or you can take it a step further by clearly defining your goal to, ‘I want to save $1,000 by (August).’ You can take it even a step further by saying by (October), you will have saved another $1,000 and by (December) another $1,000. With a tangible goal like this, you will either fail or succeed. To make sure you succeed, find support. Share your goal with those closest to you.”
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4. Goal: Cut Costs by Cancelling Recurring Subscriptions
Why it’s hard to do: “You're talking yourself out of canceling a subscription service you hardly use because you think about how you might use it in the future,” said Doug Milnes, CFA and personal finance expert for MoneyGeek. “You're actually having what psychologists call 'loss aversion', where the losses loom larger than your gains. Loss aversion means that to make a change the gain has to outweigh the loss you're experiencing. So the subscription service you hardly ever use is somehow worth more than those dollars you pay each month.”
How to do it better: “Reframe your cancellation,” Milnes said. “Remove your loss aversion by framing this as an experiment. Remind yourself that you can always get the service back if you want it. This takes out the pain of losing the service, enabling you to remove that subscription that's quietly sucking money out of your bank account.”
5. Goal: Improve My Financial Well-Being
Why it’s hard to do: “The most difficult part of this resolution is owning up to your struggles and following through with a commitment to improve your financial situation,” said Jacqui Kearns, who leads financial education initiatives at Affinity Federal Credit Union. “In tough times, it can be challenging to stay positive as you get real with your finances on your own.”
How to do it better: “Seek help from a professional at your financial institution who can work with you on reevaluating your budget, exploring your options for debt relief, and more,” Kearns said. “With their help, you can look at your entire financial picture and organize your priorities. Financial institutions such as credit unions may also help by offering financial literacy education. With these resources in place, you can obtain professional guidance online, in person, or over the phone.”
6. Goal: Own My Financial Strengths and Weaknesses
Why it’s hard to do: “It’s difficult to confront your weaknesses, and oftentimes individuals ignore their bad financial habits because they may fear being judged,” said Brett Tharp, CFP, financial planning education consultant at eMoney Advisor.
How to do it better: “According to a 2019 eMoney survey, 57% of U.S. adults purposely avoid talking about personal finances with their friends,” Tharp said. “Nearly half (43%) report feeling stressed, embarrassed or confused when talking about their personal finances, and 20% never talk about money with other people.”
“The first step to long-term, positive financial behaviors is being honest with yourself,” Tharp continued. “Identify your positive habits and understand where you can make improvements. For example, if you have a bad credit score, determine what led to that situation and know that there are ways to fix it. At the same time, acknowledge the things that you’re doing well such as paying bills on time or building an emergency fund.”
7. Goal: Make More Money
Why it’s hard to do: “Many people only have one source of income, and it's from an employer that controls how much you make and how often you work,” said Sam Hawrylack, a personal finance expert and co-founder of How To FIRE. “Traditional routes for increasing income, like getting a promotion, take a long time and even additional certifications and degrees.”
How to do it better: “You don't need to find thousands more dollars to begin making an impact on your income. Start small with rewards programs like cash back or survey sites,” Hawrylack said. “If you have extra time, look into ideas for side hustles and passive income. You could end up making extra cash out of a hobby! Better yet, make your existing money work for you by investing. There are many beginner-friendly investment options, including apps like Acorns and Stash that invest the change on your purchases. You'll have the easiest time sticking to your resolution if you enjoy the extra work, or it doesn't take much work at all.”
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