January 6, 2020

How to Make a New Year’s Resolution You’ll Stick To

With 2020 upon us, a good number of people have rung in the new year by making New Year’s resolutions. Sure, you can strive to create change in your life at any time, but the new year feels like a distinct point to rethink your direction and start building toward something better, especially when it comes to financial goals.  A survey by Ipsos found that of Americans who have made a New Year’s resolution, over half made a resolution related to their finances, and financial goals were tied with eating healthier as the most popular resolutions of 20201.

However, that same survey also found that, among the Americans who made a resolution for 2019, 56% of them kept it for less than a full year. Those don’t give you the best odds that you’ll actually stick with your goal. Fortunately, there’s a simple way to give yourself an edge: make your resolution the right way. Even though your motivation to achieve a resolution and the resolution itself may seem like two separate things, psychological studies suggest that they’re actually connected.

Edwin A. Locke and Gary P. Latham, pioneers of goal-setting theory, discovered in their research that when people are working towards specific and difficult goals, they perform better compared to when they’re just asked to do their best2. It turns out that when people are presented with a challenge, they’re more likely to rise to the occasion than sink into their couches for a comforting Netflix binge. Another set of researchers, Cornelius J. König and Piers Steel, noticed that the proximity of a goal plays a role in how likely people are to achieve it3. In other words, you’re more likely to work toward a goal with a deadline that’s three days away than you are to work toward a goal with a deadline that’s 30 days away.

So how do you apply this to a New Year’s resolution? First, avoid vague resolutions like “save more money,” as well as resolutions that will be really easy or practically impossible to achieve. Instead, make a resolution that’s specific and that will be moderately difficult for you to keep. For example, you could make a resolution to save $1,000 in four months. Second, break your resolution down into small goals that you can complete over time, so you’re always working toward something you can accomplish in the near future. Continuing with the example, start on your path to saving $1,000 by setting a goal to save $25 in one week.

If you’re still thinking about what you want to accomplish this year, maybe knowing you have an advantage will inspire you to reach for a financial resolution you’ve been considering. Even if it’s a goal that doesn’t sound like a big deal, remember that small changes pave the way for major ones. That’s definitely something we’ve seen at Earnin as our community and support both continue to grow, and now going into 2020 we’re working on products that we wouldn’t have dreamed of when the company first started. Whenever you’re trying to achieve something great, it’s those first steps that are the most important.

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