It’s that sparkly, special time again – when the dawn of a new year brings thoughts of change and self-improvement in the form of New Year’s Resolutions.
According to a Statista survey, saving more money was the fourth most common resolution for 2023, with 39% of respondents putting that as one of their top goals. Reducing living expenses also made the list at 19%.
However, there’s an equally alarming statistic to keep in mind: Only about 8% of people stick to their resolutions throughout the year!
So how can you beat the odds and create achievable financial goals? It’s all about choosing the right resolutions (and avoiding the wrong ones). Let’s explore five things to avoid when it comes to setting financial goals in 2024 – and how you can set a great one instead.
5 of the Worst Financial Goals You Could Set for 2024
1. No specific goals at all
This one seems obvious, but hear me out: “Saving more money” isn’t a great goal, because it doesn’t have any real numbers you can measure or imply any motivation. Without any direction or goalposts for your finances, it can be tough to know if you’re on track.
Like any business coach will tell you, your goals should be SMART:
- Specific – What are you saving the money for?
- Measurable – How much money will you save?
- Achievable – Is it possible?
- Realistic – Do you actually believe you’ll follow through?
- Timely – When will you save it?
Think about why you want to save more money – is it for a family vacation? A new car? Once you have a clear reason why, you can nail down exactly how much you’ll need and set a date to get there.
So rather than writing “save more money” on your resolution list, you can write “save $4,000 by July for a family trip to Disney World.” That’s specific and measurable, and each time you read it you’ll be reminded of your motivation!
Along those same lines, it’s important to set goals that are realistic. Putting $1,000 extra in your retirement account each month sounds amazing, but is it doable? You don’t want to have to change your goals every month to make them work – it’s better to take that long-term look now.
Related: How to Create Habits that Stick
2. Too many goals
On the flip side of that coin, we often see people with too many financial goals. They want to go on vacation, buy the car, pay off all debt, buy investment properties – the list goes on (and on).
The problem here is that too many goals can be overwhelming. It often means we’re focused on the joy and satisfaction of the end product, without really envisioning the road to get there. In the end, individuals with too many goals will often make the list and end up never looking at it again.
Author and time management coach Elizabeth Grace Saunders recommends that we set just one or two core goals to focus on in the new year – especially since we tend to focus on just one anyways.
3. Letting others set your goals
We live in the era of influencers, where a quick scroll on social media leads to a video about a new stock you just have to invest in, and you’re immediately hooked.
But letting others influence you financial goals is rarely a good idea – each person is different, so a one-size-fits-all approach to finances just doesn’t work. And it’s not just influencers, either. Friends, family, children and larger societal expectations can easily affect how we feel about our money.
That doesn’t mean you can’t talk about new year’s resolutions with your loved ones, it just means that you need to take it one step further. Bounce ideas off of others or take a look online to see what goals are out there, but then set aside some time to think it through on your own or with your partner. Which financial resolutions are a best fit for you (even if they aren’t part of the mainstream)?
4. Ignoring your emergency fund and retirement accounts
When we think about new year’s resolutions, it’s easy to reach for those rose-colored glasses and look for the brightest, most fun goals. But often, it’s the less-exciting goals that can have the biggest impact on your life overall.
From big home renovations to that trip overseas, it can be tempting to put your more splurge-worthy wishes at the top of the list – and that’s okay, as long as you aren’t trading out your long-term goals to make it happen.
It may be best to meet with your financial advisor around the new year mark to check in on those long-term accounts, like retirement or an emergency fund. Are they on track? Do they need more focus in 2024?
Once you have those squared away, you can feel confident in your fun spending.
5. Hoping to get rich quick
We’ve all dreamed about winning the lottery or finding a random $1,000,000 bill on the sidewalk – but those dreams don’t usually have a place in reality.
From big jackpots to get-rich-quick ideas, these aren’t grounded enough to be considered “goals.” And while it’s okay to dream of these overnight successes, they don’t replace real, actionable financial goals.
How to Set a Great Financial Goal for 2024
Now that you know what not to do, let’s take a look at how you should approach your 2024 goals.
- Reflect on the past. What’s worked in the past – and what still needs some more work? How did you reach your previous financial goals?
- Set priorities. Look at the long-term and short-term future and consider what you want your lifestyle to look like. How can you balance your wants and needs? What one or two goals are most important to you?
- Be realistic. What obstacles will you need to overcome in your journey, and how will you do so? Make your goals measurable and plan some check-ins throughout the year.
- Connect with the experts. There are a ton of resources and experienced professionals out there that can help you make strong financial resolutions – now’s a great time to reach out!
- Remember your “why.” A few years ago we talked about setting resolutions based on your values – and that same approach still applies! Tying your resolutions to your values can help keep you motivated even after the holiday cheer is long gone.
Making resolutions is a fun exercise, but it’s also an opportunity to make real, positive momentum with your finances. With these five financial goals to avoid and five tips for getting them right, you can set great resolutions for 2024 and beyond.
Start the New Year with Clarity
Want help building your 2024 financial plan? We’ve got you covered. Click here to connect with a member of the Clarity team and get started today.