Making New Year's resolutions? Keep them small and achievable

 

Here are strategies to consider:

Don’t rely on motivation

"New Year’s is when many people feel motivated to make changes, including making saving for retirement a priority. But motivation can dissipate quickly, as anyone who has joined a gym in January and stopped going in February knows."

Instead find ways to "shrink your goals to make them easier to accomplish."

Keep the bar low

Setting ambitious goals sets you up for failure. Set specific actions, not that you will save more but that you will save $X per month and set up an automatic transfer to that account. 

Stress the positive

Focus on how small steps will add up to something substantial over time. See blog posts on compound interest. 

The easier the task, the better the odds of sticking to it when motivation flags.

Calculate small changes

"Seemingly small reductions in investment fees can also produce big savings over time. According to Vanguard Group, $100,000 invested at 6% a year would grow to $429,000 after 25 years with no fees. With a 1% annual fee, the balance would grow to $339,000."

Experimental approach

Don't cut back on things you enjoy. Instead get rid of subscriptions you don’t use, negotiating discounts with cellphone and cable companies, and save a portion of a tax refund or raise.

Try negotiating a rent reduction, especially if you live in a city where people who can work from home are fleeing the city, leaving empty apartments. 

Don’t get upset by setbacks. “Think of your behavior change (goal, resolution) as an experiment. Figure out why your strategy didn’t work, change your approach, and try again. 

Just take one step

"In contrast to eating healthier or exercising more, retirement savings can be put on autopilot, via payroll deductions to a 401(k) or automated transfers from a savings account to an individual retirement account."  Set up the account today and then set a date in the future to start funding the account.

 Source: Advice from an interview of Dr. BJ Fogg, a behavior scientist at Stanford University, author of “Tiny Habits: The Small Changes that Change Everything,” Ramit Sethi, author of “I Will Teach You to Be Rich” and other behavior experts by Anne Tergesen, writing for The Wall Street Journal, Dec. 29. 2020.