Keeping your money-saving resolutions on track

The start of a new year is the perfect time to reflect on the past and set goals for the future. Around two-thirds of Americans make resolutions related to their finances, aiming to save more, spend wisely, and achieve their savings goals. In this guide, we'll explore key strategies, including a money-saving chart, to help you keep and achieve your financial New Year's resolutions.

Before diving into the details, let's understand why setting financial resolutions is essential. Financial goals provide direction, focus, and a sense of purpose. Setting financial goals for the new year offers you the chance to reset and refocus those goals. Whether creating an emergency fund, paying off debt, or investing for the future, having clear money resolutions can significantly impact your financial well-being.

What are SMART goals?

SMART financial goals are a framework for setting objectives that are Specific, Measurable, Achievable, Relevant, and Time-bound. This approach provides a structured and systematic way to define and pursue financial objectives. Let's break down each component of SMART's financial goals:

Specific

Clearly define your money-saving resolution. Be precise about what you want to achieve.

• Example: Instead of a vague goal like "save money," a specific goal would be "save $12,000 for an emergency fund."

Measurable

Set quantifiable targets so that you can track your progress.

• Example: If you’ve set the goal to save $12,000 for an emergency fund, these targets could be ensuring you’re putting away around $1,000 each month.

Achievable

Ensure that your financial goal is realistic and attainable.

• Example: If your budget is stretched thin and you’re struggling to find the funds to put away that $1,000 each month, then your goal of saving $12,000 this year might not be achievable. Reset your money saving resolution to something more realistic for your situation.

Relevant

Align your financial goal with your overall financial objectives and life priorities.

• Example: While building a strong emergency fund should always be a priority, if your long-term objective is to buy a home, perhaps you can work on this goal in tandem. One option would be to overshoot your goal of $10,000, and have a portion go toward that down payment fund while the rest continues to be in case of emergency.

Time-bound

Set a deadline for achieving your financial goal. This adds a sense of urgency and helps you stay focused.

• Example: Instead of a vague timeframe like "someday," make it time-bound. Check in on your progress frequently, ensuring you are reaching milestones in order to save that $12,000 by the end of the year.

By incorporating these SMART criteria into your financial goals, you create a clear roadmap that enhances your chances of success. This approach encourages thoughtful planning, measurement of progress, and the establishment of realistic and achievable milestones, ensuring that your financial resolutions are more than just aspirations but actionable plans with a higher likelihood of being realized.

Example: Money Saving Resolution

Specific: Save $12,000 for an emergency fund.

Measurable: Track progress using a money-saving chart.

Achievable: Set aside a realistic amount from each paycheck.

Relevant: Emergency funds contribute to overall financial stability.

Time-Bound: Achieve the goal by the end of the year.

What is a money-saving chart?

A money-saving chart, also known as a savings tracker or savings chart, is a visual tool that helps individuals monitor and visualize their progress toward a specific savings goal. It is a tangible representation of financial accomplishments, providing a clear and motivating way to track how much money has been saved over time. Here's a breakdown of what a typical money-saving chart entails:

• Identifying the goal:
• Clearly define the financial goal you are working towards. This could be saving for an emergency fund, a vacation, a down payment on a house, or any other specific financial objective.
• Breaking down the goal:
• Divide the total savings goal into smaller, more manageable chunks. Breaking down a large goal into smaller milestones makes it less overwhelming and allows you to celebrate progress along the way.
• Setting milestones:
• Establish specific milestones or checkpoints that represent different stages of your savings journey. These milestones can be monthly, quarterly, or based on other relevant timeframes.
• Tracking progress:
• Regularly update the chart to reflect the amount of money saved at each milestone. This may involve coloring in sections, filling in boxes, or using symbols to visually represent progress.
• Remaining amount:
• Include a section that indicates the remaining amount to be saved. This serves as a constant reminder of the work that still needs to be done to reach your financial goal.

Utilizing a money-saving chart adds a visual element to saving money, making it easier to stay motivated and committed to your financial goals. It is a tangible representation of your achievements, and will help foster a sense of accomplishment as you move closer to financial success.

A simple example of a money-saving chart might be a table with columns for months, a row for the total savings goal, a row for the amount saved each month, and a row for the remaining amount. As you make progress, you update the chart to reflect your accomplishments.

As with any New Year's resolution, you may face challenges. Identifying and addressing common roadblocks will help you stay on track:

• Unexpected expenses: Life is unpredictable, and unforeseen expenses can derail your savings plan. Car repairs, medical emergencies, or other unanticipated costs can strain your budget. Make sure to incorporate a buffer in your budget for miscellaneous or emergency expenses. An emergency fund specifically for unexpected costs can act as a financial safety net.
• Lack of discipline: Building and maintaining discipline in saving money can be challenging. Impulse spending or neglecting to allocate a portion of your income to savings can hinder progress. Set yourself reminders to make sure you’re making transfers on a regular basis — and make sure you’re growing your savings in a high-yield savings account or high-yield CD to make sure your money keeps growing!
• Setting unrealistic goals: Ambitious financial goals can be motivating but may become unrealistic and discouraging if they're too challenging to achieve within a given timeframe. Regularly reassess your goals; feel free to adjust them based on your current financial situation. Setting smaller, achievable milestones can help you stay motivated and on track.

Recognize and reward yourself as you achieve milestones. Celebrating your successes reinforces positive financial behavior and motivates you to continue working towards your goals.

Financial success through New Year's resolutions is attainable with careful planning and dedication. Set SMART goals, use a money-saving chart, overcome challenges, and celebrate your achievements. This year, commit to your financial well-being and watch your money-saving resolutions turn into lasting habits.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.