- More than half of us have made New Year’s Resolutions in the past*, but only one in ten of us have managed to stick to them**.
- The rest of us are likely to have fallen foul of at least one of the five fatal mistakes that will kill off your financial resolutions before February.
Sarah Coles, Personal Finance Analyst, Hargreaves Lansdown:
"Many people have been trying and failing to stick to the same financial resolutions for years. If you’ve ever pledged to turn over a new leaf, take lunch to work every day, give up your morning coffee, or stop wasting money, then you may well be one of the serial failed resolvers."
"There’s every chance you have fallen foul of one of the five fatal mistakes that will kill off your financial resolutions before you even get round to putting the Christmas decorations back in the loft."
Do the difficult stuff first
Don’t tailor your plan to fit in with real life
… "I’m going to turn over a new leaf and lead the perfect financial life."
Lifestyle change is hard, so complete overnight lifestyle transformation is going to be incredibly difficult to stick with. Far better to set clear, achievable goals, one at a time.
… "I’m going to give up my morning coffee/drinks after work/takeaway."
They are obvious candidates for sacrifice, because they are luxuries we don’t really need. However, if they are a great source of joy, giving them up will be a constant, ongoing battle – increasing your chances of failure.
Before you give up the things you love, it makes far more sense to give up the things you don’t love at all – like overpaying for your utilities or buying expensive grocery brands.
… "I’m going to spend less."
If you make a general pledge to spend less - without thinking about a budget and spending diary and deciding where to make the cuts – you’ll have about as much success as a general pledge to lose weight without a diet.
… "I’m going to save enough to retire at 50"
Just as someone aiming to lose two stone a month is going to be disillusioned after a week or two, if you set unrealistic savings goals and try to get there too quickly, you’ll soon run out of momentum. Set realistic, achievable goals, build a budget around them, and save a sensible, affordable sum every month.
… "I’m going to save anything I have left at the end of the month."
Expenses have a nasty habit of absorbing all the cash available, so by the end of the month, around one in four people have run out of money and are living of their credit cards***. It’s far better to pay yourself first: save or invest a fixed sum at the beginning of every month by direct debit, and budget your way to the end of the month.
* Source: Cancer Research
** Source: University of Bristol
*** Source: GoCompare