Why your financial resolutions might have failed

Why your financial resolutions might have failed

Did you make any New Year’s financial resolutions?  If you did, have you kept them?

Like improving your diet or getting more exercise I think changing your financial attitude and behaviours are tough things to do.  I should know because we’re trying to improve ourselves.  For example, we want to be better savers; cut down our mortgage debt and also build up our emergency fund in 2011.  Those processes aren’t going very well (yet) but more on that in a bit.  On the positive side, while it took us a few years to get some financial goals in place, we’ve now getting on track.  Last year was the first year we made a concerted effort to get organized and it worked out in the end.   In 2010, we not only maximized our TFSAs, we cleaned-up our RRSP accounts (used ETFs instead of mutual funds), optimized our RRSPs and took a great trip.  We also put some lump sum payments on our old mortgage.  It was a great year overall.

Starting new financial behaviours are tough, keeping them going is equally challenging.   Here are a few reasons why your New Year’s financial resolutions may have bombed already:

1. Unrealistic Goals

Any goal-setting endeavour needs to be SMART:  Specific, Measurable, Attainable, Realistic and Time-Oriented.  It can be great to set a goal that’s high, to give you motivation to attain it, but if it’s too high then you won’t see or feel any progress which can be crushing.  I think most goals should be stretch assignments, just beyond today’s reach.  With a new place there are lots of expenses, I don’t need to list them for you because I’m sure you’ve moved enough yourself and you know what they are.  Beyond initial big ticket items like appliances and window treatments in December, we’ve had to install a second sump pump, a toilet (that failed) and fix our Heat Recovery Ventilation (HRV) system.  Those items alone weren’t too costly but they added up to tidy sum together.   One of our goals was to build a healthy emergency fund for 2011 but that target seems out of reach for this year since many of the “what ifs” in life became a reality.  All this to say I think our emergency fund target was a little aggressive.  We’ll still try and build our emergency fund but it might be considerably less than we thought it would be.

2. Thinking Negatively

What good comes from thinking negatively?  Close to nothing in my opinion.  Negativity breeds negativity.  Easy to say you won’t think this way but hard not to do sometimes.  I struggle with this from time to time since when I mess up, I tend to be pretty hard on myself.  Mistakes happen, bad things happen and I’m not perfect.   Live and learn and smile on are good rules of thumb.  There is certainly more power in positive thinking and so I encourage you to try it as much as you can.  That includes your financial goals.

3. Ignoring Any Progress

If you have made some SMART goals and you’re working through them, make sure you don’t forget another “M”, Monitor.  It’s important to monitor your progress and give yourself some positive reinforcement when you accomplish some milestones on your path or a kick in the pants when things get rough.  Recently, I’ve been a little down myself given all the things we need to fix and now maintain in this new home.  Broken toilets and backup sump pumps aside, we also needed to install a new roof this spring.  We knew about lifting shingles on the home when we bought it in October 2010 but that installation didn’t make the financial commitment for this work any easier to digest.  That said, I have to remind myself of all the things WE HAVE done and the progress we’ve made for only being in the house for five months.  Sure, some fixes were unexpected but advances have been made to make our house to make it a much better home.  We need to take pride in that.  Ignoring any progress you make on your financial objectives is important as well.   Celebrate all victories big and small.

4. Lack of Sharing

One of the best known ways to keep yourself on course, for anything in life, is to tell someone about your goals.  Find a friend, a family member, a co-worker or if you’re like me, do all the above AND start a blog AND tell everyone 😉   If you communicate on a regular basis with like-minded people or folks who are interested in your goals, chances are you have a much better chance to achieve them.  Sharing your goals will keep them top of mind.  If you haven’t shared your financial goals with anyone yet, you’re already fighting an uphill battle.  I feel fortunate to interact frequently with some pretty savvy investors (and savers) in the blogosphere and this financial community has certainly inspired me to become a better investor.  Pressure is always helpful, especially when folks are reading my decisions and actions.


Recognizing we can never do everything we want all at once, my wife and I have decided to strike a balance in 2011; live for today, make our house a home and take small steps at paying off the mortgage.  No doubt we’ve experienced some unexpected events since moving into our home but life is like that; just when you think things are clear and under control it quickly changes on you and the needle moves.  In the end, plans are good but if those goals are unrealistic, you have a negative attitude, successes aren’t celebrated and goals are never shared, whatever is working probably won’t be for long.

Then again, maybe you never got started with any resolutions in the first place???

Why do you think financial resolutions fail?

Do you have financial goals that are doomed to fail in 2011?

Conversely, have you already exceeded your expectations?

As always, share your thoughts!

My Own Advisor

19 Responses to "Why your financial resolutions might have failed"

  1. I think this is one of the most important information for me. And i’m glad reading your article. But wanna remark on few general things, The site style is great, the articles is really great : D. Good job, cheers

  2. Actually, I quoted from the book titled “The Shaolin Way- Ten Modern Secrets of Survival from a Shaolin Grandmaster” by Steve DeMasco. It’s an interesting read, though a bit …strange in a way. I hope you’d like it.

  3. Great work Kevin, congrats!!!

    Sure, sometimes many things are “easier” but it doesn’t mean they are the best choice for the long-run. That you know well, I already know 😉

  4. @DIY Investor, I like your idea of 30-day sprint goals. Any type of short-term focus is excellent and likely improves your odds of success. Thanks for your contribution!

    BTW – I’m going to borrow that expression at some point for a blogpost! Don’t worry Robert, you’ll get all the credit 😉

  5. Andrew, you don’t need to thank me! 😉

    Hard to believe a guy like you, who has done and got over so much, gets down sometimes. I guess it proves we are all human.

    I like what you said about your imaginary goal. I think that little bit of dreaming can be such a great motivation for many people, all people in fact. The power of imagery is huge. Seeing is truly believing and once you believe, there is little that can’t be accomplished; physically, spiritually, mentally and emotionally.

    Thanks for the positive feedback once again Andrew, I value your input.


  6. Elemag, I’m so with you! The pareto principle is well established and your comment is a great reminder to me to simply push any negativity aside and keep going forward, as you say.

    Like Dr. Juran said many years ago, keep your focus on the “vital few” and not so much the “trivial many”.

    Who is the author of the book? Richard Koch?

    I think I should pick that puppy up and read it 🙂

  7. Just paid off the car and now I’m pretty much cleaned out for a while… but I also set up things to be better off down the road. Leasing a new car would have been the “easier” option but by far the more expensive one over the long haul!

  8. The thing that works for me is to set 30 day goals. We can do anything for 30days. Then, after a couple of 30 days goals are reached, the goal may be a habit. Example: order water everytime you eat out over the next 30 days!

  9. Thanks for the mention Mark. I got 3/4 of the way through your post and then saw the reference. That was pretty funny.

    Sometimes, I get down too, when reaching for goals and not attaining them. But I have a coping mechanism that works most of the time:

    I imagine exactly where I’d be if I didn’t make the goal in the first place. And then I re-assess, again, what I have achieved, and recognize that I’ve made nice headway.

    I have some physical goals that I haven’t met, and sometimes that frustrates me. But I also have to recognize that I’m not in control of everything. If you think you can control everything, then you’re destined for misery. At least, that’s what I tell myself.

    My body looks weird, when I don’t wear a shirt. And when you live in a tropical climate (like I do) going shirtless is a necessity!) I bend to one side, and the stomach muscles on my left side can’t contract. In photos, even at a distance, you can really tell. But that’s not something I can control. And trust me…I have fought against that like you wouldn’t believe. I exercise like a mad dog, but still, I can’t contract those muscles.

    I’ve also struggled trying to put on weight. I set a goal to reach 150 lbs by the end of May, but I’m not going to make it. That said, I’m better off than where I would be if I didn’t set those goals.

    And no doubt, you’re better off too, even if you don’t meet every goal you aspire to achieve.

    This was a good post Mark. A welcome reminder to us all.

  10. I recently read in a book about the “80/20 % theory”. In short it goes like this: Generally, your life will consist of 80% pleasant and nice things and 20% bad and unwanted things like illness, traffic, bad co-workers, etc. It’s obvious that you have little or no control of the bad stuff, so next time when negativity embraces your mind, just say to your self that you are currently experiencing a little bit of those 20% percent. Then readjust your goal and keep going.

    I also tend to write my goals in my journal on January 1st each year. Then I go back and read them every quarter. At the end of the year, I am amazed and excited how much has been achieved.


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