How Not to Move Back in With Your Parents

Financial Literacy 101 Podcast Episodes

Setting Your Financial New Year's Resolution

Listen to the Podcast

Listen to this week's episode where Pete and Alex help you figure out your financial goals for 2017.

Read the Show Notes

The start of a New Year always brings about the desire in people to decide that they will make themselves better in some fashion and, often, those resolutions are financial.

What’s unfortunate is that many of these resolutions fizzle out after the first month or two because of the difficulty of keeping a new habit going for an entire 365 days.

Here at MoneySmarts, we’re no different. We’ve made resolution after resolution only to fizzle out after a little time has passed. However, over time we’ve learned some tricks to help us keep our resolutions for as long as we need.

Turn Your Resolution into a Financial Goal

A resolution is a goal, which we discussed in further detail in a previous tipregarding goal setting. This tip is more about what you can do to increase the likelihood that the goal you set will be something you’ll be able to achieve.

The goal you create should be as specific as possible.

Try not to leave your goal simply at, “I plan on saving more money this year” or even, “I plan on saving $30 over the course of the next 30 days.” While the second example is better, it’s still not perfect because it doesn’t address how you plan on saving the money, just that you’re going to save money.

With your goals, you want the language to be such that there’s not much, if any, wiggle room because wiggle room increases your ability to back out of the goal. You want your goal to be airtight.

Follow Alex’s example from this week’s episode of “How Not to Move Back in With Your Parents” and do something along the lines of, “I will save $30 over the next 30 days by reducing my dining out budget.”

Give Your Goal a Timeframe

Aside from its specificity, one of the reasons why this goal statement is so much more effective is because of the timeframe that’s attached to it.

To increase the chance of you accomplishing your goal, it’s important that you establish a deadline to determine whether or not you’ve succeeded in accomplishing your goal.Without a timeframe, there’s no sense of urgency or motivation for you to actually complete your goal.

And rather than trying to be impressive with just one long-term goal, try creating one or several short-term goals (say, 1 – 3 months) that will eventually lead you to achieving your long-term goal.

If you’d like to study abroad in a couple of years (as is the case with Alex), it’s better to say that you’re going to cut back on eating out (or earning extra money via a job) a certain amount each month, rather than saying you’re going to save a large amount over the course of the next couple years.

The more specific your goal and timeframe, the more likely you are to achieve the goal.

Make Your Goal Part of Your Budget

Regardless of what goals you have and what your deadlines are, an incredibly important first step is to establish your budget so that you can visually lay out your plan to accomplish your goals.

Having something in front of you that outlines your plans will increase your chances of following through on your goals compared to just keeping everything in your mind.

If you’re not sure how to effectively set your budget, e-mail to start a discussion or set up an appointment with one of our IU MoneySmart Team members. They will be happy to help you come up with an effective plan to accomplish your goals.