8 hacks to help you keep your resolutions

When I was in the first stage of personal finance, I had two obvious goals:

  1. Pay off my credit card
  2. Save $10,000 for an emergency fund

It was by no means easy. But, I had a plan, and I hit my goal, and it felt so great. And then I set another goal: automatic deposits into a Roth IRA. And I did that too, gaining more confidence and momentum. Step aside Katniss, I was a girl on fire.

But after awhile, the next steps became a little unclear. Was I supposed to learn more about investing? Should I look for ways to save more, or create additional income streams? I wasn’t sure. And since I had a lot of my savings on autopilot, I just let it ride. I didn’t set new goals. I wasn’t exactly irresponsible. I had a healthy savings account. I wasn’t making bad choices anymore.

But then I started getting lazy about other money habits too. I wasn’t checking my bank statements every month, and sometimes I’d find an error from three months prior. I didn’t draw up a detailed budget for our home renovation projects, which cost more than I’d anticipated.

I recently realized that I haven’t set a personal finance goal in almost two years.

And it’s not because I don’t need to! In fact, after buying a house in January, I really would like a bigger emergency fund — since houses have water heaters that break and old garage door openers that randomly decide to open, sometimes while you’re not home. (Luckily, we had a home warranty that the seller paid for, so these issues were covered.)

So basically, my lax money habits have gotta change. And because it’s the time of year when we all swear to save more money and lose 10 pounds and write that novel and save the dolphins, I’ve rounded up my top favorite methods for setting a goal and actually reaching it.

1. For all goals: Go specific or go home

Let’s take the “save more money” goal. What does that even mean? Save $5 more than you did last year? If you don’t get specific about a goal, you may as well forget the whole thing. As they say, obtainable goals are S.M.A.R.T.: specific, measurable, attainable, relevant, and time-bound.

Actually, the Internet disagrees about what each letter of the acronym stands for, but that’s not important here. What is important is that your goal to “save more money” morphs into something like “automatically deposit $100 more into my emergency fund each month for the next 12 months” — and that you write it down.

2. Also for all goals: Make failure an option

I recently joined a course called The Finisher’s Formula, led by Ramit Sethi of I Will Teach You To Be Rich. (Side note for the skeptical: I’ve done a couple of Ramit’s courses, but I’m not paid in any way to write about them, not in discounts or early access, and he’s never slipped me a Benjamin — pinkie swear. I’m just a fan.)

Anyway, Ramit says one of his best strategies for achieving goals is to plan for failure. “The fact is, you will fail,” says Ramit. “It will happen sometimes. The key is not to try to avoid failure all the time. It’s to actually build in a process to handle that inevitable failure.”

In other words, when you don’t plan for failure, you have one setback and give up, which looks a lot like this.

But with a contingency plan in place, it’s more like this.

Here’s an example of a Plan B. Let’s say your goal is to have a money meeting with your spouse each month, but you know life gets hectic and the meeting might get cancelled. One contingency plan would be to immediately reschedule it for sometime in the next three days, and mark it on the calendar.

3. For savings goals: Use robots

Automation has been written about many times on this site and on other personal finance sites, but it’s a powerful tactic. Any money goal you automate is 687 percent more likely to be achieved.

Yes, I made that number up, but I still suspect it’s true.

4. For to-do-list goals: Harness the power of Google Calendar

You know you should shop around for car insurance every year, but you always forget until the renewal notice arrives in the mail. And at that point, it just seems easier to renew and shop around “later.”

For goals you don’t need to think about every day, use technology to set a recurring reminder. For instance, set an annual reminder to shop for insurance one month before you’re up for renewal. That way, you can shop around long before the renewal notice arrives.

5. For things you always say you should do (but never do): Give yourself a carrot

Let’s say your goal is to review your credit card statement every month on the 30th, but sometimes it just doesn’t happen (whoa, this sounds familiar). What are you missing?

A cue and a reward, according to Charles Duhigg, author of The Power of Habit: Why We Do What We Do In Life and Business. For instance, a cue might be an appointment every 30th at 5:30 p.m. that alerts you that it’s time to review your statements. And the reward could be a slice of yellow cake with chocolate frosting (yes, this one’s personal).

“You are pairing those in your brain,” says Ramit. “Saying, when I do this cue and therefore the behavior, I’m going to get this reward.”

I know this one will work. Any task is exciting if I get cake afterward. Another reason it works: When introducing a new habit, the most important thing is to get yourself to do it consistently. “Do that, and your attitude will follow,” he says. “In fact, you may not even need [the reward] a month down the line.”

6. For getting rid of bad habits: Introduce an incompatible one

Maybe your goal is to spend a certain amount on groceries each month, but you often go over your budget. One way to achieve this goal is to create an incompatible behavior, which is a new behavior that makes it impossible to do the old behavior.

For instance, if you overspend at the grocery store, you could switch to the envelope system. Now you can’t overspend because you only have a certain amount of cash in your “grocery” envelope. Overspending and paying with a set amount of cash are incompatible behaviors.

7. When you want an extra push: Don’t hold yourself accountable

If at first you don’t succeed, destroy all evidence that you tried. That’s always been my motto. And that’s why I can’t hold myself accountable to reach my goals. I need the pressure of public failure.

So if your goal is to start a side business, tell a trusted friend or mentor that you want to close one customer in the next month, and that you want them to hold you accountable.

If you’re really serious, bet them $100 that you can do it. No one likes to lose a bet.

8. For sticking to the plan: Track your awesomeness

For the last three months, I’ve been tracking my strength training workouts. It’s pretty cool to see that I’ve dropped 25 pounds on the chin-up assist machine. (Oh, and I can do unassisted chin-ups now! I think that deserves some cake…)

For most money goals, tracking progress is super easy with money management software. You can play with charts and graphs to your heart’s content, then pat yourself on the back for hitting your savings goal or staying within your budget. Or, go old-school and use Excel.

However you decide to do it, keep a record of your progress so you’ll have positive reinforcement to keep doing what you’re doing.

Okay, Readers, we all make our ca-razy New Year’s resolutions, but how do you plan to reach yours? And by the way, welcome to 2014!

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