5 financial resolutions that can actually work

Mohammed has decided to not make any resolutions this year because he finds it very depressing when his sister Fatima teases him about making and breaking promises to himself. He does want to save more, rationalize his expenses, and have better goals. Research shows that 97% of those who want to make resolutions focus on financial topics such as saving more money (70%), spending less (49%), and paying off debt (38%).

Here are 5 tips to make resolutions that last and make you ready for bigger ones.

1. Tie it to a milestone event:

The holiday season can be a great time to reflect and assess what’s new in your life. The right resolution is the one that blends with your life. If you recently got married, started school, took a new job, got a raise, or moved homes, reassess your priorities.

Update and adjust your life goals and assess how your finances are equipped to meet them.

2. Important versus urgent:

Outline your short- and long-term goals. In the short term, you may want to save to attend a destination wedding, or visit a new country. However, spend time exploring one-year or five-year plans of where you want to be. Often, in the rush to meet immediate priorities, we let go of our long-term vision.

Work with your life, not against it. Outline your long-term vision and work towards it so that you show your future self that you cared.

3. Be specific, make SMART goals:

Saving more money and spending less is a desire, not a goal. Experts say SMART goals are Specific, Measurable, Achievable, Relevant, and Time-bound. Instead of saying you will invest more, or redo your home décor, take the time to create milestones and realistic plans on how to get there.

If you have a trip planned in the next month, don’t tell yourself that you will save 50% of your salary. That’s unrealistic.

4. Take up small challenges:

If you want to save more towards, say, buying a new home or vehicle, and you find yourself with very little money, challenge yourself to start spending less. Identify money habits that go against what you are working toward.

Try no-spend days where you don’t use any payment methods for a whole day. Start small with a day and see how long you go without spending.

5. Make one small change:

Mohammed has started his year with automating his savings. Every month, on the fifth day after his salary comes into his current account, his savings account gets a boost. Small changes can set you on the path to making bigger ones that count.

A small change can be anything that you want to do but are daunted by the thought of trying. It could include unsubscribing from shopping emails, or giving up dessert three days a week so you protect your health and your wallet.

Get started to a better financial future by reviewing and resolving for better financial health.

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