Sensible Perspectives

How to Succeed at New Year’s Resolutions, Without Really Trying

Posted by on December 1, 2017

Every year, we provide guidance to help you with your New Year’s resolutions. While we used to say that our advice was based solely on introspection, evidence on how habit formation works has emerged, and it’s consistent with our recommendations. So, we can now say with confidence that if you follow these steps, you are more likely to keep your resolutions!

Sensible Financial® has thought a bit about why we all forget our New Year’s resolutions so quickly, so often, and about how you could do better. First, why we don’t usually do so well:

So, how can you structure your financial resolutions to ensure success? Here is Sensible Financial’s simple prescription (and three sample resolutions and action plans):

Make one, important, simple resolution (simple means easy to state, easy to measure, but not necessarily easy to do). For example:

Easy to state, easy to measurevs. Hard to measure (how do you know you've done it?)
Save a certain amount of money in a yearnot Spend less on restaurant meals or fancy clothes
Pay off a certain amount of credit card debtnot Reduce your reliance on credit cards
Set a balanced asset allocationnot Get your portfolio in order

Make a straightforward plan to accomplish your goal:

GoalPlan
Save a certain amount of money in a yearSave 1/12th of your target each month
Pay off a certain amount of credit card debtPay off 1/12th of the beginning of year balance each month
Set a balanced asset allocation- Select the allocation target
- Make all necessary transactions at once

Be sure you have enough resources – get someone else to do the hard work for you, then let your natural inertia ensure your progress:

GoalGet someone else to do it / use your inertia
Save a certain amount of money in a year- Set up an automatic draft from your checking account to your savings account or investment account.
- Don't change the automatic draft (the good news - if it's hard to set it up, it will be hard to change).
- Don't allow yourself to draw on that account (if it's a retirement account, it may be expensive to draw on it - encouraging you to stick to your resolution)
Pay off a certain amount of credit card debt- Set up an automatic draft from your checking account to your credit card for the monthly amount.
- Don't change it (if it's hard to set it up, it will be hard to change). 
- Pay for your new purchases each month.
- If you have trouble keeping your credit card in your pocket, cut it up or leave it in a safe location at home.
Set a balanced asset allocation- Buy an inexpensive asset allocation fund, OR 
- Set the allocation for new investments in your 401(k), or 403(b) and leave it alone, OR 
- Hire an investment advisory firm, and have them set and maintain your allocation.

Make one, important, simple resolution (simple means easy to state, easy to measure, but not necessarily easy to do). For example:We don’t guarantee success if you follow these rules, but we do believe it’s a lot more likely. As always, if you have questions or want help, pick up the phone and give us a call at (781) 642-0890, or drop us an e-mail at info@sensiblefinancial.com. We’re here when you need us.


Rick Miller is the founder of Sensible Financial Planning and Management.