How to make 2016 financial resolutions that stick

The new year — you know what that means. Resolutions. People flocking to the gym, creating the dreaded b-word (budget) and scouring the self-help section at Barnes & Noble. Our capacity for hope is amazing — and admirable.

One simple survey of Americans and their New Year’s resolutions has been incredibly revealing for me. The personal finance website GoBankingRates.com recently asked respondents about their 2016 resolutions and offered six possibilities (enjoy life to the fullest, live a healthier lifestyle, lose weight, save more and spend less, spend more time with family and friends, pay down debt) along with “none of the above.” Multiple choices were permitted.

Everyone wants to seize the day

Despite — and I would suggest perhaps because of — persistent economic woes facing our country, such as the lukewarm economic recovery, wage stagnation and mounting debt, the most popular resolution choices were “Enjoy life to the fullest” and “Live a healthier lifestyle.” The first was chosen by 45.7 percent of respondents, the second by 41.1 percent. The least popular of the six choices? The two related to finance.

First of all, who checks the box of something so dull as fiscal discipline, which is often about denying one’s urges, when there’s a box offering wild, unfettered, carpe-diem possibilities like “Enjoy life to the fullest”? Thank goodness for grounded, serious-minded realists such as you. Digging a little deeper into the survey responses, however, one discovers that if you add the finance-focused resolution responses together, you get almost 60 percent of respondents choosing one or both of these as their resolutions. I take this to mean that there are a lot of undercover realists out there: a dream tucked away in their hearts, but worry on their minds. The tension in our lives in 2016 is palpable.

Dreams versus reality

Being a millennial, I particularly sense the tension in this generation’s responses to the survey. We certainly want to enjoy life to the fullest and live a healthier lifestyle, but we actually chose these less than both baby boomers and seniors. Young millennials (ages 18–34) were the segment most concerned with making time with loved ones, and millennials overall were the most concerned with spending less and saving money. Even at a young age, and in many cases without homes and households to keep up, this generation, facing enormous college debt and bleak job prospects, knows the need to budget and save.

Pragmatic planning helps dreams grow

For all of you conflicted dreamer realists, regardless of your generation, here’s a few specific financial tips for the new year. Vague goals like “spend less, save more” just aren’t going to cut it. The pathway to real dreams is paved with precision and pragmatism.

1. Budget: In some ways, budgeting is the financial equivalent of that perennial weight-losing resolution. You must choose necessary spending (“good calories”) over unnecessary spending (“empty calories”). But it doesn’t have to be as painful as it once was. Apps like Mint.com and YouNeedABudget.com can make prioritizing much simpler.
2. (Student) debt: Like a budget, once you have a plan, it will much more manageable. First, get all the facts about your debt — how much you owe in total, your interest rate, your monthly payment and how long it will take you to pay off the debt. Then you need to create different scenarios. If you pay an extra $100/$200/$300 a month, how much faster will you be able to pay it down? How much interest will you save? Find what works for you and set the goal of reaching that amount to put toward paying down your debt each month.
3. Credit cards: If you know yourself, and know that you won’t be able to limit how much you spend on them, then tear them up. It’s easier to remove the temptation than let it get out of control. However, if you pay your cards off every month without penalties, then they can be a useful tool to get airline points or cash back.
4. Large purchase/event: This might be the year that you are buying a house, getting married or having a baby. In that case, it may be time to slash all but the most absolutely essential spending. Try exporting your bank/credit card statements to Excel and sorting your purchases from the largest to the smallest. Review all purchases, big and small, to determine what can be given up. You’ll be amazed at how the monthly savings will add up.

Jennifer Pagliara is a financial adviser with CapWealth Advisors, LLC, and a proud member of the millennial generation. Her column speaks to her peers and anyone else that wants to get ahead financially. For more information about Jennifer, visit www.capwealthadvisors.com.