At the conclusion of each year we find ourselves engaging in the ritual of making resolutions for the New Year. What kept you from keeping your 2020 resolutions? The pandemic alone is reason enough. But, there are additional reasons why we fail to sustain our resolutions. So let’s consider some of those pitfalls as we plan for 2021.
All Resolutions are not equal
Let’s face it, some resolutions are much more difficult to follow through on than others. Financial resolutions are some of the most difficult to maintain. In other words, the failure rate of people not following through on their financial resolutions are greater than other areas of commitment. But Why? The truth is financial resolutions involve transparency. There is a sense of guilt and shame associated with our financial behavior and therefore we don’t talk about it. Hence the reason why our success rate of financial resolutions is low. In this area of your life be realistic. Financial resolutions are emotional so don’t rush into them.
The fact that the calendar has changed to a new year is not reason enough to make a resolution. Is the month of January really the best time for you to make a resolution in this Covid-19 season? There must be purpose and or benefits driving your resolution! Think about the benefits of having a budget, how it might reduce your stress level, even cause you to become debt free so that you can enjoy vacations. The more practical and pragmatic you can make the benefit outcomes to your goals, the more likely you are to achieve success.
Is it all or nothing?
Resolutions also fail because you have an all or nothing approach. Let’s say you planned to save 10% of your income in 2021 and you achieved your goal in January but were only able to save 5% in February, then what? For some of you it means that you have broken your resolution or failed and now you want to give up. What you need to recognize is that you are actually succeeding! It’s not like you didn’t save any money in February. It’s only that you were not able to reach the 10% bench mark established as the goal. But you are a winner, saving 5%, verses nothing! Too many resolutions are not achieved because of the all or nothing approach. Is that the ”hill you’re going to die on” in 2021?
Where are you?
In making your financial resolutions you need to determine what stage of life you are in. For example, some people think that by age 22 you should have completed your first college degree and any mistakes made up until that point can be attributed to being young and foolish. Then from age 22 through 35 might be the time to get married and raise a family. From age 35 through 55 is when you should earn money and become an entrepreneur. After that, it’s time to focus on retirement. Knowing where you are in life can help guide you in making financial resolutions. It can help determine things like how much you need and what’s the next step for you. Don’t just make financial resolutions without proper context.
As you make financial plans and goals for 2021 I want you to be realistic. Think about the process and progress incrementally. Then think about your resolutions as a covenant verses contract. In a contract, if one side breaches, the entire contract is voided. Whereas, in a covenant, if one party breaches, the entire agreement remains in place. Just because you failed in keeping your commitment in one month or one time don’t give up on the covenant during the year. Keep going! Your covenant resolution is still in effect. Plan well in 2021.