How many New Year’s resolutions have you made this year, and how many have you already abandoned? Every year, millions of people set goals to improve their lives, but many give up even before the festive decorations are packed away. January 9th, often dubbed ‘Quitters Day’, marks the point when most people are likely to abandon their resolutions, lasting just over a week into the new year.
From weight loss and increased exercise to better budgeting and decluttering, resolutions aim to enhance our well-being and eliminate bad habits. However, when it comes to money, why is it so challenging to maintain these new financial habits? The answer often lies in common pitfalls that can derail even the best intentions.
Unrealistic Expectations and Vague Goals
One primary reason financial resolutions fail is setting unrealistic targets. For instance, if you decide to cancel all your streaming subscriptions to save money, but you regularly use them, sticking to this drastic change can be tough, leading to a high chance of re-subscribing by month’s end. Instead, consider reviewing subscription options, such as opting for ad-supported plans at reduced rates. Alternatively, cancelling one or two services and rotating between them can save money without requiring overwhelming lifestyle adjustments.
Another issue is vague resolutions, like “save more money,” which lack specific actions. Without clear steps, it’s easy to lose focus and motivation. By taking a few straightforward measures, you can conduct a financial reality check and implement lasting changes to boost your cash flow effectively.
How to Make Financial Resolutions Stick
1. Be Specific and Action-Oriented
Goals should be clear and focused, ideally actionable items you can tick off a list. If your aim is to build savings, start by understanding where your money goes. Review your bank statements over a typical month to identify areas for cutbacks. While you can do this manually, apps like Plum simplify the process. Plum is a smart money app that analyses your spending patterns. By connecting to your bank accounts, it calculates how much you can realistically save each month and automatically transfers funds to a savings account of your choice, eliminating monthly manual effort.
2. Implement Small, Manageable Changes
Focusing on one small change at a time increases the likelihood of success compared to attempting a complete lifestyle overhaul. Tailor these changes to your financial goals and personal situation. For example, if buying a house is your target, opening a dedicated savings account could be your first step. To pay off debts, tackle one at a time. Using an app like Plum to monitor spending provides an easy win, giving you clarity on monthly expenses.
Plum’s Auto-Savers feature encourages incremental savings, such as setting aside an extra penny daily, which can accumulate to £667 over a year for paid subscribers. Completing these small tasks boosts motivation and fosters consistency in your financial habits.
3. Conduct Regular Financial Check-Ins
Financial resolutions shouldn’t be confined to New Year’s; regular reviews make a significant difference. Schedule monthly or quarterly sessions to assess your finances and savings progress. You might think you’re cutting back, but frequent dining out or outdated broadband contracts could indicate overspending. Regular check-ins help quickly identify what’s working and where adjustments are needed, ensuring long-term sustainability.
4. Choose Easy-to-Start and Maintain Changes
Most people prefer not to spend excessive time scrutinising bank statements or tracking interest earnings. Tools like Plum automate these tasks, enhancing adherence to new habits. With over two million users, Plum’s popularity stems from features like Auto-Savers, which automatically transfer money from your bank to savings accounts. This encourages consistent saving habits, potentially growing a nest egg by year-end.
You can select from various account options, including standard savings accounts, cash ISAs, or investment ISAs for stock market exposure. Remember, investments carry risk, as values can fluctuate, potentially resulting in losses.
5. Maintain Flexibility in Your Plans
Life is unpredictable, so flexibility in financial goals is crucial. Unexpected events like a pay rise, windfall, job loss, or emergency expenses can impact your situation. Building an emergency savings pot provides a safety net, reducing the need for stressful and costly debt. Plum allows you to adjust savings amounts at any time, accommodating income changes without added financial pressure. This adaptability lets you tweak savings to align with evolving goals seamlessly.
Plum: Your Questions Answered
You can download the basic version of Plum for free, with subscription options available to unlock additional features that accelerate progress toward financial goals.
How many people use it? More than 2.5 million individuals have joined Plum, leveraging it to save and invest for the future.
What can it do besides saving and investing? Plum serves as an intuitive budgeting tool, tracking regular payments and expenses. It offers a comprehensive financial overview, allowing you to filter transactions by account or retailer and set weekly spending allowances.
How does Plum keep my money safe? The app employs encryption and biometric security like face and fingerprint ID. It holds Cyber Essentials certification and adheres to CIS and ISO 27001 security frameworks, demonstrating a strong commitment to safety.
Is it regulated? Yes, Plum is regulated by the Financial Conduct Authority (FCA). Funds in Plum Easy Access Interest Pockets, Lifetime ISAs, or Cash ISAs are protected by the Financial Services Compensation Scheme (FSCS) up to £120,000 per customer per bank.
Download Plum now to start your journey toward smarter financial management.
