New Year’s resolutions often don’t stay in our minds long, and then reappear as the year ends to be supplanted by new ones. Do New Year’s resolutions work for you?
If not, then you are in the majority.
Goals are usually fulfilled or dropped as new problems arise that need to be solved immediately. Time does not operate in accordance with our expectations, and it is not feasible to focus on all your goals at the same time. However – implementation of steps toward some goals can be automated, so that they are being worked at constantly and consistently, in the background of your life.
Small steps taken over and over again can achieve long-term dreams.
When considering a New Year’s resolution you’ve already made, or haven’t decided on yet, consider what’s going to turn it into a reality, and whether or not that’s the only path to your goal. You are unique, including your motivations. Changing your mindset about goal-formation may create a different approach that is more suited to you.
For example: one resolution that is particularly difficult to maintain is regarding weight-loss, and a common approach would be to renew dieting aspirations. An alternative mindset might be to reinforce something you like that also promotes the desired result as a side-effect, so your focus is on what you’re gaining instead of giving up. Instead of hoping to lose 25 pounds, plan to hike for 25 hours throughout the year. If done with friends, the added social element might be an extra booster to keep you on your desired path too.
More importantly when framing your resolution is whether you’ve created an action plan, one that can be measured to track and define success by steps taken throughout the year.
Repetition is the key to mastery of any skill. We can all become better at fulfilling our goals. Take a small step toward your goal that requires less effort. Then take it again. And again. Until that part becomes the background of your life.
Can financial resolutions be broken down into smaller goals with action-oriented trackable metrics?
Yes. It doesn’t mean they won’t still be challenging to achieve, but it may demonstrate how adding to your family foundation helps secure your financial freedom.
Consider this example of how time can work miracles in terms of investing. Two people’s long-terms goals of retirement are still so far way they are hard to consider putting money toward, they have 35 years to go. The pioneer decides to go ahead and start taking small steps right away, and the straggler doesn’t plan to shirk the goal, but merely delay it since there is so much time left.
The pioneer decides to put $25 a week into their 401(k), and continue this process for 10 years, and then stop completely. The straggler starts when the pioneer stops, and puts $25 dollars a week in for the next 25 years.
Assuming an average 7% investment return over the thirty-five-year period, the straggler never catches up. Even though the pioneer only put in $13,000 in capital and the straggler put in $32,500, the pioneer ends up with $100,831 compared to the straggler’s $85,046!
It may be difficult to figure out how to take that small step into investing, over and over again, each week or month. If done consistently and constantly through a payroll deduction into a 401(k) or retirement account, it may turn into the background of your life.
Other financial resolutions can also be reframed in terms of what you’re achieving and what small steps will get you there:
- Budgeting each month may seem like a hassle, but then you don’t need to worry about how each purchase would impact your goals.
- Having cash in a savings account may seem like you’re giving up the use of it, but having that safety net could make each day a little less anxiety-ridden.
- Knowing what is needed to create that college savings fund may make it easier to make that contribution, and reinforce how good you feel about doing so when you are devoting yourself to inevitably helping your child with homework.
It may be better for some to have one large contribution each year instead of each week to achieve a similar goal. It’s about finding what works for you, and what helps you create the best version of yourself.
How much savings will be needed for any particular goal? Arvest Wealth Management has thirty-six financial calculators setup on our website to address those questions.
Taking the next step toward the new you
Even with a great plan, there are many goals and priorities to juggle. Long-terms goals aren’t achieved overnight, and may need to be adjusted to accommodate new circumstances along the way. That’s where a financial co-pilot can help guide you and keep you on track as you face life’s transitions.
Meeting with a client advisor, such as those at Arvest Wealth Management, can help you understand what variables to consider and develop strategies that are appropriate based on your current assets, needs, and risk tolerance.
Every day is a new day to reinvent ourselves and succeed. It’s not about whether you were the straggler before – it’s about if you’re going to be the pioneer tomorrow. A New Year’s resolution is one way to turn that sentiment into an iron will that will bring forth an even better year, and we’d be pleased to be part of your growth and success whether you choose that mechanism or a different approach.
Click here to setup a meeting with one of our client advisors.