Realistic Resolutions

Last year I made a resolution not to make any resolutions, and I achieved success thankyouverymuch.  But for many Americans, resolutions start out with the best of intentions, only to wither and die by the time March Madness rolls around. Actually, a third of people won’t make it through the end of January, and 4 out of 5 will eventually break their resolutions.  Nonetheless, at Community Ladders, we love goals and resolutions, but only if they are accompanied by benchmarks, timelines, and built-in accountability.

Here are three tips we use when creating goals with members:

Don’t be too aggressive – Cold turkey is only good as Thanksgiving leftovers. While the cold turkey method of instantly stopping a bad habit or going at a goal full bore, many find that they burn out quickly, fail, and ultimately abandon the effort.  The same is true with finances. Our members know that we break financial plans into smaller steps that we complete a few at a time. This is the kind of sustained, measured approach that seems to work best for long term changes in behavior.

Be reasonable in building a timeline – Echoing the preceding paragraph, it’s important to be reasonable about how much you can accomplish in a given amount of time.  Without being too aggressive, lay out a series of interim targets for whatever your goal is. Put those targets in your main calendar (putting them separately makes them too easy to ignore).  Also, plan in advance what will happen if you miss a target.  For example, do you have a week to make it right if you miss a target?  Is there a penalty you’ll impose on yourself? It’s vital to plan this in advance, since you will be more like to convince yourself to be lenient once you’ve already missed a target.

As an example of building a timeline with targets, I’m working with a member to reduce spending by 10% over six months. We are starting out with a 5% reduction in spending from previous levels (in this case, the average monthly expenditure over September through November).  If she hits her target of a 5% drop for January, she will reduce spending by an additional 1% over the subsequent 5 months.  So, if all goes as planned, by July she we will spending 10% less per month.   

Stay accountable to someone – Since day one, Community Ladders has been punching the air for external accountability (namely, that members are accountable to their C-L advisor).  So it is with New Year’s resolutions. Tell a friend, colleague, or C-L advisor what your goals and timeline are, and ask them to hold you accountable and to check in regularly. Better still, partner with someone who has a similar goal and work on it together. If applicable, build in interim rewards and penalties and tell others (so they can make sure you follow through).

For example, you might make an arrangement with work colleagues to encourage each other to pack a lunch more often.  Compile a list of cool places to take your packed lunch out of the office, and make it a social outing without the cost of dining out.     

Bill Varettoni is a financial planner and the founder of Community Ladders.