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.

Time to get real about New Year's resolutions

Behavioral economist Dan Ariely writes in The Wall Street Journal (2/1/20):
"To get a resolution to stick, we need to make the desired behavior automatic. For instance, if you want to exercise more, build a very simple habit: Every Tuesday at 5 p.m., go to a group exercise class after work. Ideally it will be something you find enjoyable and rewarding, so that the habit is more likely to stick. The more you repeat a behavior in the same context at the same time, the more automatic it will become and the less you’ll have to rely on willpower."

"For a good introduction to the research on this topic, I recommend Wendy Wood’s recent book, Good Habits, Bad Habits: The Science of Making Positive Changes that Stick.”

Good Habits, Bad Habits: The Science of Making Positive Changes That Stick

by

Wendy Wood

 

A landmark book about how we form habits, and what we can do with this knowledge to make positive change

"We spend a shocking 43 percent of our day doing things without thinking about them. That means that almost half of our actions aren't conscious choices but the result of our non-conscious mind nudging our body to act along learned behaviors. How we respond to the people around us; the way we conduct ourselves in a meeting; what we buy; when and how we exercise, eat, and drink--a truly remarkable number of things we do every day, regardless of their complexity, operate outside of our awareness. We do them automatically. We do them by habit. And yet, whenever we want to change something about ourselves, we rely on willpower. We keep turning to our conscious selves, hoping that our determination and intention will be enough to effect positive change. And that is why almost all of us fail. But what if you could harness the extraordinary power of your unconscious mind, which already determines so much of what you do, to truly reach your goals?"

"Wendy Wood draws on three decades of original research to explain the fascinating science of how we form habits, and offers the key to unlocking our habitual mind in order to make the changes we seek. A potent mix of neuroscience, case studies, and experiments conducted in her lab, Good Habits, Bad Habits is a comprehensive, accessible, and above all deeply practical book that will change the way you think about almost every aspect of your life. By explaining how our brains are wired to respond to rewards, receive cues from our surroundings, and shut down when faced with too much friction, Wood skillfully dissects habit formation, demonstrating how we can take advantage of this knowledge to form better habits" Source:

https://www.goodreads.com/book/show/43565368-good-habits-bad-habits

Less Phone, More Nature: 34 Resolutions For a Better 2018

One of my favorite investment writers, Jason Zweig, who writes The Intelligent Investor column for The Wall Street Journal, Shares his suggestions for New Year's resolutions (12/29/17). Zweig advises: "Make all your resolutions in public. The fear of social pressure, whether it materializes or not, will help you keep your word, since you are pledging not just to yourself but to others."
Some of my favorites:

• Listening to what someone else is saying without hearing what you already think is one of the hardest challenges for the human mind. When you listen, listen as if your life depends on it. Otherwise, you’ll just hear your own words coming out of someone else’s mouth.
• Be more judgmental about ideas and less judgmental about people.
• If you think you’re the smartest person in the room, you must not have talked to everybody in the room yet.
• Never try to get other people to change their minds without first trying to understand why they think the way they do. Never do that without being open to the possibility that the mind that might need to change the most could be your own.
• Try to take your work more seriously, and yourself less seriously. The more seriously you take your work, the easier it will become to take yourself less seriously; the constant reminders of your ignorance should never cease to amaze you.
• Tweet less; read more.
• Talk less; listen more.

Especially the last two!

Read the full list at: http://on.wsj.com/2lsq4Vt

Now is a great time to revisit your resolutions

How to help ensure  you keep your New Year's resolutions and/or reach your financial goals?   

Dan Ariely, Professor of Psychology and Behavioral Economics at Duke University, provides these suggestions: 

"One option is to make it into a public commitment and use the people around you to push yourself get into better behavior." 

"Another option is to frame the New Year’s Resolution as a thing to do for 6 weeks and give it your best for this shorter duration with the hope that a shorter commitment is more doable and that by the time you will end the six weeks that you will have a new habit."

Participate in professor Ariely's research on New Year's resolutions: http://www.surveygizmo.com/s3/3260941/New-Years-Resolutions

5 New Year’s Money Resolutions

“New Year’s resolutions often involve eating better and exercising, but you can also use the start of the year to get financially fit” (The following tips are quoted from Associated Press writer J. Pisani).

1. Know where you stand. Begin 2014 with an overall view of your finances. Figure out your net worth.

2. Think small. Aiming to save a big pot of money can be overwhelming and set you up for failure. Instead of resolving to save $1,200 over the year, for example, break that amount into smaller goals.

3. Pay yourself first. Make any savings automatic.

4. Pay down debt. Tackle credit-card debt this year.

5. Save more for retirement. No matter your age, most people should be putting 10 percent to 15 percent of their income toward retirement….

For details and suggestions read the full article at:

http://www.sltrib.com/sltrib/money/57363131-79/money-retirement-says-pay.html.csp

Turning Resolutions into Realities

"As we begin 2013, you may be wondering what the best course of action is to reach your goals this year. To turn New Year’s resolutions into a new year of realities, you must have a plan. That plan needs to consist of laying out a series of steps (large and small) that will guide you down the path toward success over the next 12 months." http://practicemanagementblog.fpanet.org/2013/01/04/turning-resolutions-into-realities/ Although written for financial advisors, the steps are the same for consumers.
Create Clarity Around Your Goals
Compartmentalize Your Goals
Attach Emotion to the Activities
Find an Accountability Partner
It takes time to change old (bad) habits. Enlist the help of a partner who shares your goals and will support you in maintaining your new habits. These recommendations are similar to SMART goals. For help in sticking with your resolutions, sign up for the Small Steps to Health and Wealth challenge: http://njaes.rutgers.edu/sshw/