Focusing on small, cumulative actions can take you far, whether you want to train for a marathon, clean out your garage or start a hobby. This is especially true for money goals, for which daily habits can have big payoffs.
But while New Year’s money resolutions are common – with 84% of Americans setting money goals, according to a survey from NerdWallet conducted by The Harris Poll – so is abandoning them. More than 20% of those surveyed ditched their resolutions within two weeks, and over half failed to achieve some or all of their money goals.
To hit your big money goals in 2020, focus on months and days.
Know your money and pick your goal
Do some initial research and get a detailed understanding of your cash flow, because you have a better chance of improving your finances when you know your starting point. The 50/30/20 budget, where half your income covers needs, 30% goes to wants and 20% goes to debt and savings, is an easy way to do that.
Use what you learn to decide on and write out your money resolution, getting as specific and realistic as you can. If you want to pay off your debt, for instance, list each account, its balance, monthly payment and interest rate.
Make monthly goals
Divide your goal into smaller tasks. List the actions you can take monthly and even weekly that will build up to you hitting your target by year-end.
“People treat resolutions like a sprint when really it’s a marathon,” said Lauren Anastasio, a certified financial planner at SoFi, an online lender. “Anytime you have a goal in mind, break it down into as many mini-goals as you can. You feel more accomplished and you have more momentum when you’re checking things off a to-do list.”
To build an emergency fund of $1,000, for example, you’ll need to save a little over $80 each month.
Build daily habits
To get better at sticking to your budget, set aside time at the end of each day to review what you spent and how well you followed your budget. Automate savings or debt payments to the extent that you can.
“A lot of building good money habits comes down to knowing your needs versus wants and having a spending plan so you know what obligations you’re meeting,” said Paul Golden, managing director of communications at the nonprofit National Endowment for Financial Education.
Give yourself a break – and a reward
You might set a certain debt payment, then your car’s transmission blows – and drags your monthly budget down with it. Give yourself the flexibility to adjust the plan so you don’t just give up.
“One of the benefits of breaking the goal into mini-goals is that if you miss one piece, you don’t feel like you failed at the whole thing,” Anastasio said.
And reward yourself when you hit milestones, like choosing a robo-advisor to start investing with or having a month where you stick to your budget. Achieving money resolutions isn’t easy.
“I find people don’t celebrate the little things,” says Tania Brown, a Georgia-based certified financial planner. “A month where you didn’t rack up any new credit card debt is huge.”
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This column was provided to The Associated Press by the personal finance website NerdWallet. Sean Pyles is a writer at NerdWallet.