As the year draws to a close and you look ahead to 2025, you might be planning to set some resolutions. If so, you aren’t alone.
According to a YouGov poll, 16% of Brits planned to set a resolution for 2024. Health improvements were the most common goal, with 56% of those making a resolution saying they wanted to do more exercise or improve fitness.
Financial goals were a close second, with 49% saying they wanted to save more money.
Setting financial resolutions of your own could be a useful way to stamp out bad habits and improve your day-to-day financial behaviours, all of which may boost your progress towards your goals.
However, it can be challenging to make new lifestyle changes stick, and according to the YouGov poll, only 31% of people who set resolutions in 2023 kept to them at all.
Fortunately, if you rethink the way that you approach your resolutions, you may find it easier to make meaningful long-term changes.
Read on to learn four psychological tricks to help you stick to your financial resolutions.
1. Focus on the “why” rather than the “how”
When setting a resolution, you may find it easier to stay motivated if you focus on your rationale for making the behavioural change, rather than the change itself.
For example, you might make a commitment to exercise three times a week. After a few weeks, you may find that you’re tired and losing your motivation, so you start skipping workouts. In this instance, it could be useful to consider why you wanted to exercise more in the first place.
You might strive to be more active so you can play with your grandchildren, for example. This is a far more powerful reason to keep up with your routine, rather than simply trying to reach the target of three workouts a week.
The same is true if you’re trying to build wealth. For instance, consistently investing £1,000 each month may be far easier if you focus on the lifestyle that you will eventually be able to afford with that wealth later in life.
Alternatively, you may have a specific retirement date in mind, or a once in a lifetime trip you want to take one day. These are crucial milestones in your life, and they are likely to mean more to you than anything you might spend wealth on in the short term. That’s why keeping your goals in mind could make it easier to save regularly and withstand the temptation to spend those funds instead.
2. Aim for smaller milestones
A large goal, such as investing £120,000 in the next 10 years, may seem very daunting. Even if you make regular contributions to your investments for six months, you’ll only be a fraction of the way to meeting your goal. This realisation could make it hard to stay motivated.
Conversely, investing £1,000 a month may feel a lot more manageable. To begin with, you might only commit to this for three months. Once you reach that milestone, you can set another one – perhaps for a six month or a longer period this time.
Breaking your goals down into small bite sized chunks in this manner could make it much easier to maintain behavioural changes. Yet, if you overreach, you might be more likely to give up as the goal seems impossible to achieve.
3. Avoid the “all-or-nothing” mindset
If you’ve ever failed to keep a resolution in the past, it might be because you fell victim to the “all or nothing” mindset.
Imagine you set a goal of saving £1,000 each month. For the first three months of the year, you stick to it. Then, your car breaks down or you need to pay for some emergency home repairs, so you only save £500 in the fourth month.
If you have an all-or-nothing mindset, you might decide that you’ve failed at the resolution and give up on it. But you’ve still saved £3,500 in total, and there is no reason that you can’t continue saving £1,000 a month moving forward.
Try to avoid the all-or-nothing mindset and if you don’t quite reach your goal at times, keep going the following month.
4. Track your progress
Tracking your progress towards your goals is a simple but effective way to give yourself some perspective and stay motivated.
Imagine you want to develop a regular investing habit, so you transfer wealth into a Stocks and Shares ISA every month. If you never check the account, it could feel as if those funds disappear and you have nothing to show for it.
It’s only when you calculate how much you’ve contributed so far, and how much closer you are to your savings goal, that you can see the benefits of your hard work.
Bear in mind that you don’t want to check your investments too regularly because this can lead to increased anxiety about your portfolio’s performance. Even so, keeping track of the contributions you make to savings and investments can help with motivation.
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Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term (minimum of 5 years) and should fit in with your overall risk profile and financial circumstances.
