This is the time of year when we get inundated with articles and news stories about New Year’s resolutions and how we seem doomed to fail to achieve them. It’s no different in the financial realm. Most people pay lip service to creating an emergency fund or saving for a new car or a down payment on a new home, but most will fail at these resolutions too.
It’s not surprising, since we fail at many of the things we resolve to do that entail changing our behavior. It is possible to change your behavior, but the momentum of a life time of habits stacks the deck against you.
Lucky, unlike dieting, there is something incredibly easy you can do to ensure success in most financial resolutions.
The single most powerful method to achieve success is this: Automate it.
That’s right. By making the steps to achieve your goal automatic, you eliminate the single biggest hurdle to your success – you!
For example, if your New Year’s resolution is to save $20,000 for a down payment on a new house then you need to determine when you want to achieve this goal. Once you have that number, divide that by the number of pay periods (or deposits) you can realistically absorb into your budget and you’ll have the amount you need to deposit each pay period to meet your goal.
Next, set up an automatic savings plan (ING is famous making this easy with their ING Direct Orange Savings Accounts) to take the appropriate amount out of your checking account each pay period and stow it in the savings account.
After the initial setup, you can go back to life as normal, albeit with a bit less money in your checking account each month. But you’ll have the piece of mind that you’re taking the steps toward your goal without even thinking about it.
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