The concept of the New Year’s Resolution is a tradition stretching back to Ancient Babylon. Unfortunately, despite more than 4,000 years of practice, people are still not very good at actually sticking to their resolutions. 

No matter what your resolution is (give up smoking, run a marathon, get better with money), you’re not alone if you find yourself faltering already. In fact, the second Friday of January is known as Quitters’ Day – by this point, 80% of would-be resolutioners have tapped out.  

No wonder the following weekday begins with Blue Monday – allegedly the most depressing day of the year! 

Why do people quit their resolutions? 

It’s not just laziness; it’s a deep-rooted and primal psychological urge. 

The reason we quit our resolutions is the same reason we have to try so hard to get in shape, make better financial decisions, or change our diet – but it’s very easy to skip the gym, spend all our money, and go to the chipper. 

Human brains are wired to focus on short-term and immediate rewards at the expense of long-term goals. We may have evolved from simple apes into intelligent and forward-thinking beings, but nobody has told our brains this! Whenever we make a decision, our natural impulse is for the choice that delivers immediate pleasure rather than short-term discomfort, and we need to actively practice self-discipline to get around this. 

If we want to clean up our diets, we have to give up an immediate pleasure (eating a load of doughnuts) in exchange for a benefit that we won’t see for months or years (feeling and looking better with a taut and toned beach body).  

Because we are hardwired to seek these immediate benefits, our minds constantly pull us back to the very actions we are trying to avoid. So, we quit. 

Forward planning: applying psychology to your financial goals 

Financial decisions (whether we make them at the start of the year or not) follow this same pattern. 

If you want to save money – whether for a short-term goal like a holiday or a long-term investment like a retirement fund – then your brain goes into “I want a doughnut” mode. You’re forgoing a pleasure right now (buying that new pair of runners) for a benefit you won’t see until further down the line (a better lifestyle in retirement).  

Because of this, many of us never quite get around to starting (more than a third of people in Ireland have no plan for retirement*) and we find it difficult to stick to the plan when we do get going. 

Re-wiring your brain isn’t easy, but there are a few things we can do to make staying the course a little more manageable. 

1. Set many goals 

“I can’t stick to one goal,” you protest. “How will having more goals help?” Don’t worry, the main goal is still the main goal – but if you set short, medium, and long-term goals instead of one huge, long-term goal then the benefits of your actions are more immediate and tangible.  

If you have a new year’s resolution to get better with money, as many Irish people do, then you could potentially break it down into goals like this: 

• Short term: keeping on top of your monthly budget, cutting wasteful spending. 
• Medium term: building an emergency fund, saving for a house deposit. 
• Long term: using AVCs (Additional Voluntary Contributions) to maximise your retirement fund, beginning to invest. 

2. Start small, stay consistent 

In relation to the above, it’s a lot easier to make small sacrifices than drastic changes.  

If you’ve never saved before, then deciding 2024 is the year you will finish up with a €25,000 investment account might be a little on the ambitious side. But putting €25 a week into a savings account? Child’s play. 

Once you’ve done that, push yourself a little. Can you get to €50 a week? More?  

Keep pushing until you feel the pinch – you'll be surprised at how much you can save if you take a sustainable, slow approach. In fact, if you save €25 in the first week of the year and increase the amount you save by €1 a week, you’ll have over €2,600 by the end of the year. 

3. Don’t get in your own way 

When you make a resolution, make it as easy as possible to stick to it. Don’t commit to putting money aside on a regular date if that date is the week before payday. Don’t pledge to go to the hi-tech gym across town instead of exercising at home if it means getting up at 5am to do it.  

Make sure that your goals are realistic and easy to stick to.  One good strategy for achieving your financial goals is to take the thinking out of the process. Some ideas could include: 

• Setting up a direct debit out of your account and straight into savings on payday.  
• Keeping one bank account for essentials and one for discretionary spending. 
• Moving any money left over the day before payday into savings or investments. 
• Arranging with your employer for your pension to come straight out of your salary. 

4. Treat yourself! 

Lastly, be sure to remind yourself regularly of the goal and take time to reward yourself along the way for making progress towards it. It’s great to build your financial health but remember to have fun along the way – don't be a miser to yourself!  

If you’ve managed to stick to a budget, have your pension sorted, and you’re building an emergency fund, maybe that bit of money left over the day before payday could go on something fun. Life is for the living, after all. 

In fact, if you’re still sticking to your resolutions in the second week of January, it could be time for that reward. After all, you’re beating 80% of people right now! 

 

* Central Statistics Office – Pension Coverage 2022 | retrieved 4 January, 2024