New year's resolutions falling by the wayside?
We are well into the new year – and I am sure you are questioning, just like I am, where on earth the first three weeks have gone. I have never been one for big new year’s resolutions, but I imagine that it is about now that cracks start to show. Whether it was a dry January, an exercise/diet plan, or a budget, it is important to acknowledge why we sometimes find things hard to stick to. When it comes to money, there is no ‘one size fits all’ solution. The problem with so much financial advice is that it assumes we all respond the same way, that we are rational. Humans are anything but rational. We have deep and complex feelings about money that can undermine even the best intentions and resolutions.
If you are feeling ‘failure’ around your money resolutions or goals, then maybe it’s time to think about a new approach. In a recent blog post Amanda Steinberg points out that budgets work for some people, but not most. A poll in 2013 showed that only 32% of Americans maintain a budget. Presumably that means the other 68% have tried but not managed to stick with it. The good news is that you can be successful with money without budgeting.
The key is saving – so long as you are saving enough every month it doesn’t actually matter how you categorise your spending. If sticking to a budget feels like deprivation and sacrifice (just like that dry January) then focus on moving money every month from your checking account to your savings account. Start with something small, and set it up as an automatic transfer (that bit is really important), on pay day. Then you never even see the money. Every couple of months increase it by 10% until you reach your target monthly savings.
Don’t set yourself goals that are unrealistic. You’ll only feel demoralised and end up on a spending binge. A gradual increase is far more effective that transferring too much and raiding it at the end of the month. As with anything, it’s about getting into a habit. Once you see that bank balance go up you start to change your money story. You can start to tell yourself ‘I am a saver’, instead of ‘I am a spender’. Then anything becomes possible.