New Year’s Resolution: Build a Personal Financial System

New Year’s resolutions can be tricky, especially when it comes to finances. They can help us set goals to improve our financial wellbeing, but they can also make us feel worse when we don’t follow through on them. There are different ways to set yourself up for success. As one example, perhaps it would help to set intentions instead of making resolutions. Another way to give yourself a better chance of seeing our resolutions through? Create a system instead of setting goals.

What does that mean and what does it take? Let’s go through it.

Don’t rely on willpower

It’s extremely difficult to will yourself to follow your New Year’s resolutions. We only have so much energy and willpower at our disposal, and we have to use much of it for other aspects of our lives—work, kids, cooking, fitness, and so forth. It’s exhausting to make choices day after day.

Make it a habit

Instead, how can you turn your financial goals into a habit? It becomes something you just automatically do, rather than a conscious decision you have to make every time. New York Times best-selling author James Clear writes extensively about how to build good habits, from starting small (maybe you follow the seven percent principle to get started) to changing how you identify as a person (this year, you are now someone who keeps track of their spending and manages their money effectively). He also writes specifically about how he has succeeded by following systems and why goals can be problematic.

What might those systematic habits look like?

Make a budget

Making a budget can feel intimidating if you haven’t done it before. (Good thing we have an article that tells you how to create a budget, step by step!) But once you’ve made your monthly budget, all you have to do is follow it. You don’t have to fret over whether you can order in on a Friday night—your budget will tell you how much you have left to spend on eating out.

Use a budgeting app

“But then I have to keep track of my income and expenses,” you might retort. That’s where technology comes in to save the day. There is a wide array of apps (some free, some paid) that will show you your spending and saving habits. All you have to do is check the app on a consistent basis.

Try the envelope system

An alternative is the envelope system. Essentially, you set aside money each month for your different spending categories (groceries, utilities, dining out, etc.), and then once you’ve spent the money in that envelope, you’ve reached the end of your budget for that item. This blog gives a detailed explanation of what the envelope system is and how to use it to your advantage.

Put it on your calendar

There’s a saying that if it’s not in your calendar, it doesn’t exist. By putting in down in your calendar, you let your brain off the hook. You no longer have to remember to, say, check your budgeting app or pay your credit card bill. You just listen to the reminder on your phone that tells you to look at your spending every few days to help you stay on budget.

Have an accountability partner

A calendar can only do so much to hold you accountable. Another person is even better. Whether it’s your partner, a sibling, or a friend, going through this process with someone else will make it easier for you to stick to your New Year’s resolution. Make it a friendly competition, or just be there to support one another and, if need be, help each other get back on track.

Automate your savings

Another piece of technology you can take advantage of?Automatic transfers. You can schedule payments in advance (and avoid late fees) or set up direct deposit to your savings account (and avoid impulse spending), to name two examples. But there are many ways that automatic transfers can help you save money.

No matter what your financial goals are, there is no right or wrong way to go about achieving them. What matters is that it works for you. Hopefully some of these ideas and tactics will help you boost your savings and increase your financial health in the new year.