For many people, financial resolutions might be lighthearted fodder for small talk at holiday parties.
Not for Cynthia Luna. She is deadly serious about them.
The financial planner from Waxahachie, Texas sends all her clients New Year’s cards with their resolutions written down in black and white. If you stray, prepare to hear about it.
“The right way is to use baby steps and make them achievable and encouraging – because you don’t want to fail at your financial resolutions,” says Luna, a principal at Moonshot Financial Group.
Financial resolutions start the new year on the right foot. In fact, 65% of Americans are drawing them up for 2025, according to a new study from money manager Fidelity Investments.
The winning responses are classic: Save more money (43%), pay down debt (37%) and spend less (31%).
But for one of the only times in the history of Fidelity’s 16-year survey, people looking to save money are favoring short-term goals over long-term ones, by 55% to 45%.
That indicates people do not really have the luxury of thinking 20 or 30 years off and are instead focusing on right now – paying the rent or mortgage, buying gas, covering monthly utility bills and putting food on the table.
“This will be a year of living practically,” says Rita Assaf, vice president of retirement products at Fidelity, who analyzed the findings. “Short-term savings goals are just more of a priority right now. People are very concerned about the day-to-day.”
Millennials are the most determined generation in setting financial resolutions, with 74% of them making money goals for the New Year. That compares to 70% of Gen Z, 67% of Gen X and only 52% of Baby Boomers.
There is an art to making financial resolutions, though. To nudge you in the direction of success, here are a few key pointers from financial professionals:
GO SMALL
You may have heard the career advice, "Go big!" But when it comes to financial resolutions, the smarter path is the exact opposite – go small.
Think too vague and grandiose – you want to be a multimillionaire, maybe – and you will likely fall short, be depressed about your failing, and drop your goals altogether.
Instead, focus on tiny, daily, concrete steps that will eventually get you where you want to go.
“Have as few goals as possible, the fewer the better,” says Thomas Scanlon, a financial advisor with Raymond James in Manchester, Connecticut. “Start small: If all you can do is put an extra $100 a month towards your credit card balance, do it.”
AUTOMATION IS YOUR FRIEND
One problem with resolutions is that they tend to rely on the human will, and the human will is fallible.
Your resolution is to not be tempted by those shopping discounts you love? Good luck with that because sooner or later, you will probably fail. In the Fidelity survey, 37% of people admitted they busted out on last year’s resolutions.
The smart thing is to take choice out of your own hands whenever possible, so your will does not even come into play. Automate your monthly retirement plan contribution. Automate your bill payments. If you get a raise, automate saving a percentage of that, too.
“I am a big fan of automation,” says W. Michael Lofley, a financial planner in Stuart, Florida. “The less you have to think about your financial resolutions, the easier it is to stick to them. It’s ‘Set it and forget it.’ ”
REVISIT AS NEEDED
A New Year’s resolution is a snapshot in time, of what your goals are right now. Can those goals change in a month, or three months, or six months? Of course.
There is no shame in revisiting your resolutions occasionally and changing them, if necessary. It does not necessarily mean you have ‘failed’; it means that different priorities have emerged, and that is okay.
“I usually suggest people revisit those goals quarterly, or even more often if it helps you,” says Fidelity’s Assaf. “You never know what is going to arise throughout the year, and if something happens, it is perfectly fine to revise your resolutions.”