Every year I see clients who have made good intentions, in their words: ‘be better’ with money. And every year they find themselves failing in February, after postponing important financial decisions regarding their pensions, savings and budgets.
Their main concern is spending more than necessary – a concern that weighs heavily on them, especially after a lavish Christmas.
The result is that they feel stuck, afraid to move forward, and worried about exploring what’s holding them back. This in turn makes them feel ashamed and ashamed, in other words this paralysis is proof that they are ‘bad with money’.
The good news is that you can manage your finances better and you should never stop trying. And if you have failed in the past, I invite you to try something different this year.
Here are the four reasons why, in my experience, your New Year’s financial resolutions fail—and how you can stick to them this time.
The good news is that you can manage your finances better and you should never stop trying, writes Vicky Reynal
THE RESOLUTION IS. . . TOO FAR
What does ‘better management of money’ actually mean to you? Start by breaking down what you want to do into concrete, actionable steps. For example, if being “better” means saving more, set specific goals.
Download a savings app, research high-interest accounts, or automate transfers of a certain amount per month. These are solid objectives that can make your target feel less overwhelming and more manageable.
Sometimes we keep money goals vague because we fear the unknown. These concerns may arise from gaps in our knowledge or from technical terms that we do not fully understand.
However, breaking down goals into small steps will reduce your anxiety and strengthen your sense that you can achieve something.
. . . TOO complicated to keep track of
If your solution is too complex, it will become unsustainable in the long run.
Signing up for complex tools or plans can quickly become a thing of the past. I’ve had clients who used budgeting tools that were too complicated or required too much input and were abandoned after a few weeks.
How can you avoid this? Ask yourself: how will I use the information? If tracking every single expense in 30 categories is just “good to know,” it’s probably not worth it. Instead, focus on broad categories, such as groceries or subscriptions, and use the tools to identify trends, such as overspending on dining out.
If you want to investigate the reason for the overspending, you can check your accounts directly for more information.
Then find the right tool for what you need. Use apps that automatically categorize expenses instead of relying on manual spreadsheets.
Simpler systems are easier to maintain in the long run. Remember, the more energy the new system takes to keep up, the less likely you are to stick with it.
. . . UNREALISTIC SAVINGS OBJECTIVES
Trying to change too much too quickly could lead to giving up on your resolution because it feels too hard, whether you’re trying to cut back on the expensive lifestyle or organize your future by tackling retirement and other issues . investments. Set gradual targets that feel manageable rather than rushing to drastic solutions, such as cutting back on all non-essential spending on the first day or overly ambitious targets, such as sorting out your Isa, pension and investments in the first few to soften.
Failure breeds shame – which leads to passivity or the desire to give up, so making goals realistic is crucial.
. . . HAS NO UNDERLYING PROBLEM
Even the best budgeting app won’t stop you from overspending if you tend to turn to “retail therapy” to deal with anxiety, boredom, loneliness, or sadness.
And even the fanciest savings platform can’t do the job for you if you don’t overcome the fears associated with, say, watching your parents lose all their savings due to a bad investment.
My point is that sometimes it’s not a lack of will or resources that causes resolutions to fail, but the fact that you still have to deal with the underlying feelings that determined our financial choices or inaction in the first place.