How to stick to your New Year’s Resolution!

Did you make a financial New Year’s resolution? If you decided to make a drastic change, how’s it going?

My friend Lisa recently said she’s scaling back to eating out only twice a month.  That’s a drastic change, considering she used to dine out 6 days per week (12 meals), spending about $720/ month. Right now she’s got alcohol, milk, and takeout in her fridge. To cut back, she has to make several lifestyle changes, including preparing dinner, wash dishes, packing lunch the night before, remembering to take her lunch to work, and declining meals with friends she used to eat out with. That’s a lot of change.  (Some of those friend’s won’t the happy about her drastic change.)

I suggested to Lisa that she make gradual changes, scaling back to 5 days per week and saving $120/ month in January.  In February, she can move to 4 days per week, saving $240. She can scale back until she’s dinning out for 1-4 meals per week.  That’s saves $705 – $660 monthly and a whopping, $8,460 – $7,920 yearly—enough for three trips to Italy!  The gradual changes give her time to adjust to cooking, planning for meals, and all the other lifestyle changes required to create a new habit.

Last time you decided to make a drastic financial change, did you stick to it?

Making a large, sudden financial change is hard to maintain—just like fad diets that work for a few days and then leave you eating ice-cream out of the tub. Gradual change is more likely to stick. For example, you resolve to save $200 per month to start your emergency savings account.  It’s far better to save $50/ month for 1 year ($600 total) than to go from zero to $200 in one month and then quit for the rest of the year because the first month was too difficult.

Good personal finance habits are just that, HABITS. A habit is, “an action done on a regular basis; an action performed repeatedly and automatically, usually without awareness.”  The key to keeping financial resolutions—and most major changes—to incorporate them gradually so you can create new habits and replaces old ones.

Which financial New Year’s resolutions did you make? How are they going? Are you incorporating new habits? How?


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