GET BACK ON COURSE

It’s not too late to set money res­o­lu­tions for 2019

Albuquerque Journal - - BUSINESS - BY SARAH SKID­MORE SELL

New Year’s Day has come and gone and per­haps your re­solve to stick to your res­o­lu­tions has dis­ap­peared by now as well. If so, don’t de­spair — it’s not too late to set and achieve some money goals.

Why goals mat­ter

It is im­por­tant to use goals to help achieve big plans. For ex­am­ple, you may want to re­tire com­fort­ably or own a house one day. But how do you do that? By set­ting smaller, achiev­able goals to get you down that path.

“It’s plan­ning,” said Michael Eisen­berg, CPA, fi­nan­cial plan­ner and mem­ber of a fi­nan­cial lit­er­acy com­mis­sion for the Amer­i­can in­sti­tute of CPAs. “Set­ting goals is equal to plan­ning. When you have a goal you can see it and take steps to­ward it.”

And when it comes to some­thing as im­por­tant and long-term as your fi­nan­cial se­cu­rity, goals are ex­tremely im­por­tant. Once you write down a spe­cific goal it be­gins to be­come more real. And if you take ac­tion on it and see in­cre­men­tal suc­cess, it can of­ten pro­vide the pos­i­tive feed­back loop that helps keep peo­ple go­ing.

“It’s in­ter­est­ing to watch hu­man be­hav­ior,” Eisen­berg said. “When (clients) start to set some money away and see it grow they start to (think) ‘wow’ and con­tinue to do it.”

Why now?

New Year’s has passed but a re­cent study from the Whar­ton School at the Univer­sity of Penn­syl­va­nia found that other days that have im­por­tance to in­di­vid­u­als can serve as fresh starts of sorts as well.

The study found that cer­tain “land­mark” days — such as a birth­day, the start of a new week or be­gin­ning of a new school term — can jump start new habits. The ex­act day doesn’t mat­ter as much as the fact it is em­braced by an in­di­vid­ual. That’s be­cause when peo­ple buy into these land­marks, they in­ter­rupt the tra­di­tional de­ci­sion-mak­ing process, help­ing peo­ple fo­cus on their high-level goals rather than the mun­dane de­tails of daily life.

Con­sider a stop for cof­fee in the morn­ing. Where some­one might nor­mally de­cide if they are go­ing to stop based on a de­sire for cof­fee or how long the line is, this think­ing may shift if some­one has em­braced a big­ger goal, said Whar­ton re­searcher Katherine Milk­man. The think­ing may shift to “Is this cof­fee help­ing my ul­ti­mate goal of sav­ing money?”

Milk­man, who spe­cial­izes in be­hav­ior change and de­ci­sion mak­ing, also notes that peo­ple should not beat them­selves up if they have tried and failed be­fore.

“Change is hard,” she said. “We have all tried these things be­fore and we all need a kick in the butt to try again.”

How to craft a goal

It is im­por­tant to pick a goal that re­ally mat­ters to you.

Once you have a goal, make sure it is achiev­able. So don’t say you will save $29,000 if you earn $30,000, Milk­man said as an ex­am­ple. Try some­thing more bite-sized like sav­ing $2,000 and cal­cu­late what that might mean on a weekly ba­sis. Then fig­ure out what steps you need to take (take the bus, bring your lunch twice a week, etc.) to make that hap­pen.

Lastly, write it down. Ex­perts across the board agree this helps ce­ment your goal.

How to make them stick

Con­sider both the car­rot and the stick.

On the car­rot side, keep your big­ger goal in mind when you make smaller de­ci­sions along the way. And maybe con­sider how your fu­ture self might feel if you achieve that goal. A 2014 study from re­searchers from a group of uni­ver­si­ties used age pro­gres­sion soft­ware to show peo­ple what they looked like at re­tire­ment age. Those who saw the older images of them­selves were sig­nif­i­cantly more will­ing to save money for re­tire­ment than those who had not. You may also want to con­sider the stick: some peo­ple com­mit to a fi­nan­cial penalty if they fail to meet smaller goals along the way.

Some peo­ple make their goals pub­lic as the shame of ad­mit­ting fail­ure keeps them com­mit­ted. “Any­thing you can do to make it painful to fail makes it in­cen­tive to suc­ceed,” Milk­man said.

Also, try mak­ing it easy on your­self. If you are com­mit­ted to sav­ing or pay­ing off a debt, au­to­mate it so that money is moved with­out you even hav­ing to take fur­ther ac­tion.

JAE C. HONG/ASSOCIATED PRESS

A man is sil­hou­et­ted against the wall il­lu­mi­nated by the late af­ter­noon sun­light as he walks through the Na­dine and Ed Car­son Am­phithe­ater at the Walt Dis­ney Con­cert Hall in Los An­ge­les. New Years Day has come and gone and per­haps your re­solve to stick to your res­o­lu­tions has dis­ap­peared by now as well. If so, dont de­spair, its not too late to set and achieve some money goals.

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