We hit the streets to ask people about their money resolutions for 2018 and explain how to make resolutions you can actually keep.
So, this time, I’m stopping folks on the street during Art Basel to see just what they plan to do with their holiday debt hangover. Check it out.
Okay, so what is your New Year’s resolution?
Respondent 1: Maybe try to save a little more money, right?
Respondent 2: I’m trying to get out of debt of my credit cards because I spent way too much money.
Michelle: Okay, so have you thought about your New Year’s resolution?
Respondent 3: Yeah, I get a lot of money
[On-screen text] But how are you going to do that?
Respondent 4: I need to have an emergency savings account set up. I think everyone should, just because – I don’t know – if something does happen and you don’t have it… It’s better to have it there and not need it, than need it and not have it.
[On-screen text] Only 30% of Americans have a long-term financial plan
Michelle: Now, do you believe that everybody needs a budget?
Respondent 2: Yes, if you want to like, live comfortably. I believe so.
[On-screen text] 49% of Americans are concerned or anxious about their financial well-being
Michelle: So, then if I was to give you $2,500, what would you do with it?
Respondent 2: I would pay my rent two months ahead of time.
Respondent 3: Gee, I don’t know, spend it on a whole party tonight, I guess.
[On-screen text] Only 37% of Americans have enough savings to cover a $500-$1,000 emergency
Respondent 4: Buy a new car, because – I don’t know – I got here from Colorado. But I definitely need a new one.
Respondent 1: Invest, for sure.
Michelle: From the entire team at Debt.com, we wish you and yours a safe holiday season. Don’t forget to enter out sweepstakes for a chance to win $2,500.
[On-screen text] Win $2,500 in our new giveaway!
Michelle: Visit debt.com/newyearnodebt to enter today.
[On-screen text] Subscribe to our newsletter for updates & news. 1-844-402-3574. Debt.com: When life happens…
How to make New Year’s resolutions you can actually keep
Studies show only about 8 percent of people who make New Year’s resolutions meet their goals each year. For everyone else, about 80 percent of us fail by the end of February. So, are resolutions just pointless?
No. It’s just that most people don’t make resolutions the right way. A New Year’s resolution is just like any goal. If you frame it in the right way, you’re more likely to succeed.
If you have a nebulous goal to “save more money” there’s nothing actionable built into the goal that you can make happen. It’s an admirable aim, but it’s not an actionable item. “More” could be anything. If you save one dollar, that may be one more than last year. But that’s probably not what you meant.
Instead your goals need to be SMART. That means they are:
Why SMART resolutions are more effective
If you set a SMART New Year’s resolution, you give yourself a target to aim for and a timeline to do it.
So, “save more money” becomes “save $2,000 by August for a down payment on a new car.” You have an amount you want to save that you can set regular targets to hit. You also have a specific use for the money, so you’re not just saving because saving is what you’re supposed to do.
You’re more likely to keep this resolution, because you can measure your progress over time. There should be a set amount of money you move into savings to make this resolution happen. If you don’t save in January and February, you know how much you’re behind. You can also adjust your savings for March-August.
By contrast, if you just want to save more money, but you don’t save in January and February, you can just get by with saying you’ll save later in the year. Eventually you forget about it and you become part of the not making your resolutions statistic.
The best response on the street to what’s your New Year’s resolution
Our favorite response that we got was the woman who resolved to start an emergency fund. That’s a saving resolution with a specific purpose. Still, there are other things even she could add in that would make this goal more likely to be achieved.
- Determine what your emergency fund should be
- Decide how much you can save each month
- See if there are milestones you can make along the way
For instance, experts recommend that the ideal emergency fund should cover 3-6 months of budgeted expenses or monthly income to be the most effective. That way, if you lose your job or can’t work for a few months, you can survive on savings. This prevents you from running up credit card debt because of unforeseen circumstances.
Let’s say you make $2,000 per month. Your emergency fund should be $6,000 to $12,000. Of course, that’s a pretty big amount to start with. So, you can set an early milestone along the way. An initial target of $1,000 may be more realistic. That would cover most emergency expenses, like car repairs, a broken water heater or an out-of-pocket medical bill.
Then, just needs figure out how much can be set aside each month. This gives you a monthly goal to reach, a way to measure your progress, and a specific use for the money. Now you’re being SMART!
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Article last modified on September 4, 2018 Published by Debt.com, LLC . Mobile users may also access the AMP Version: Money on the Street Interviews: What’s Your New Year’s Resolution? - AMP.