There’s a line from a song in the musical Camelot that captures how many of us feel about our New Year’s resolutions: “Those dreary vows that everyone takes / Everyone breaks . . .” Well, maybe not everyone, but the vast majority. In fact, according to research released by CNN, about 80% of those who make “those dreary vows” while clinking champagne flutes on New Year’s Eve have abandoned them by the end of February. Not only that, but about 40% of us typically make financial resolutions, so if 80% of those aren’t being kept, there’s potentially a lot of lost opportunity at stake.
A Better Way?
But don’t give up all hope just yet. Even if you’ve let your best intentions slide since the first of the year, there are some psychologically sound techniques you can use to start reclaiming your goals. And it begins with something as simple as changing the way you look at your resolutions.
There’s research to suggest that instead of framing your goals negatively—“I’m going to cut my spending by 10%”—you will increase your chances of success by positioning your intentions positively—“I’m going to increase my savings by 10%”. One study indicated that 60% of those who developed goals around positive images rather than negative ones were able to maintain meaningful change in their behavior for at least a year. The secret, it seems, is to have a target that involves doing something rather than avoiding something.
Here’s a list of possible resolutions, along with their “reframed” versions. See if any of these might have potential for you:
- Instead of “Start sticking to a budget,” consider “Build a savings plan.”
- Instead of “Keep better track of my finances,” think about “Create a net worth statement.”
- Instead of “Stop throwing money away on rent,” how about “Make a plan for home ownership.”
- Instead of “Learn to live within my means,” try “Pursue financial contentment.”
You get the idea. If you think about it, you can reframe almost any behavior—financial or otherwise—by focusing on a positive goal rather than thinking about avoiding a negative condition.
Making It Real
A couple of the goals above are perennially at the top of many people’s lists, so let’s take a closer look at some of these and think about ways to put our “positive framing” into practice.
1. Living within your means. Let’s face it, many Americans have developed a habit of living on about 110% of their actual income. That’s the main reason there is over a trillion dollars in credit card debt in this country, with each cardholder owing an average balance of $6,864. But it doesn’t have to be that way. Establishing a goal of spending less than you earn is one of the most foundational resolutions you can make if you really desire to achieve financial contentment.
2. Know your net worth. Having a good working knowledge of how your total assets stack up against your total liabilities is an essential element of establishing where you stand, financially. And after all, if you don’t know where you are right now, how are you supposed to figure out how to get where you want to go? Take some time to sit down and total up everything you own, then subtract everything you owe. Better yet, schedule a conversation with a professional financial advisor, who can not only help you figure out where you stand but can also suggest optimal ways, based on your unique situation, to get started down the road to where you want to be.
3. Build a savings plan. Doesn’t this sound so much better than “make a budget”? Of course, to be perfectly honest, a budget is basically a plan for how you intend to direct your money. But the benefit of framing it as a savings plan is that this directs you toward something—a secure retirement, the down payment on a home, a child’s college education—rather than simply restraining you from spending. Once again, having a positive goal provides stronger psychological leverage than putting something in the “off limits” category. Once you’ve decided what you’re saving for, plan to put a little aside each month before you spend on anything else. By “paying yourself first,” you’re taking steady steps toward achieving your goal.
At Curio, we’re always looking for ways help you get more satisfaction out of life. And it all starts by learning what is most important to you—not just about your money, but also about how you spend your time, what matters most to you, and what your goals are. By reframing your financial resolutions, you may be able to achieve greater satisfaction, knowing that you’re progressing toward the destination you’ve chosen. To find out more about how we can help, let’s talk. And to learn more about how important it is to have a map for your financial journey, visit our website to read our article, “If You Don’t Know Where You’re Going: A Tale of Financial Preparation.”
