On why most Investors’ New Year’s resolutions fail, and how to set financial goals that stick using a clear, actionable approach.
New Year’s resolutions are a great way to start fresh and set ambitious goals.
For investors, these resolutions often focus on building wealth, improving financial habits, or expanding investment knowledge.
However, many people find themselves abandoning their resolutions within weeks.
I read a statistic that said that 80% of New Year’s resolutions fail by mid February.
Why does this happen, and how can investors set themselves up for success?
In this article, we’ll explore the most common mistakes investors make with their resolutions and provide practical steps on how to set financial goals that stick.
The Common Mistakes Investors Make with New Year’s Resolutions
Vague Goals
Many resolutions sound like this: “Make more money in the stock market” or “Invest smarter.”
While well-intentioned, these goals are too vague.
Without a specific target, it’s hard to know where to start or how to measure success.
Unrealistic Expectations
Resolutions like “double my portfolio in a year” are exciting but often set investors up for failure.
Ambitious goals can lead to high-risk strategies, unnecessary stress, or disappointment.
Set and Forget
Writing down a resolution like “Contribute to my Stocks and Shares ISA” is a good start, but many investors fail to follow through or review their progress throughout the year.
How to Set Better Financial Goals That Stick
Be Specific and Measurable
Instead of vague goals, set resolutions you can actually quantify. For example:
- A Bad Goal is: “Save more money.” This lacks clarity and leaves too much open to interpretation. You’re unlikely to know when or if you’ve succeeded.
- A Better Goal could be: “Contribute £500 per month to my Stocks and Shares ISA.” This is actionable and measurable, with a clear target to work towards. You also know if you have achieved it very obviously.
Clear, measurable goals make it easier to track progress and build momentum.
By defining specifics, such as amounts, timelines, and actions, you not only make progress more tangible but also ensure accountability.
For instance, breaking this goal down further, like saving £125 per week or cutting monthly expenses by a set amount to free up cash for investment, adds layers of achievability.
Specific goals also enable you to identify when adjustments are necessary, fostering a proactive approach rather than reactive guesswork.
This is why on The Dividend Academy, one of the first homework activities is to set a SMART goal (Specific, Measurable, Achievable, Relevant, and Time-Bound) around what you want from investing.
You can also view other students’ goals for ideas. I really think it’s important to have solid financial goals and know which direction you are going.
Focus on Long-Term Habits to Help Your Financial Goals Stick
Rather than aiming for specific returns, focus on habits that will build your portfolio over time. For example:
- Commit to reviewing your portfolio quarterly.
- Automate contributions to your investment accounts.
Targeting specific outcomes, such as achieving a certain percentage return, is often counterproductive because market performance is mostly beyond your control.
Instead, prioritise actions within your influence, like diversifying your portfolio or regularly assessing your risk tolerance.
Habits are more sustainable than outcomes that depend on unpredictable market performance.
Align Your Resolutions with Your Financial Goals
Your resolutions should align with your overall financial goals. For example, if you’re planning for early retirement, consider resolutions like:
- Increasing pension contributions to maximise your tax relief.
- Rebalancing your portfolio to reflect your risk tolerance and time horizon.
Good Example:
If your goal is to retire early, you might resolve to increase your monthly pension contributions by £200.
This aligns with the broader financial goal of building long-term wealth for retirement.
Bad Example:
Resolving to invest all your savings in speculative stocks to “retire in five years” is not aligned with a sound financial plan, as it exposes you to unnecessary risk and neglects diversification.
It might be tempting to do something like this when you see.
Prioritise Learning
Financial knowledge is a powerful asset. Set goals to expand your expertise, such as:
- Reading one investment book per quarter.
- Subscribe to new YouTube channels, a good one I have recently discovered is called The Dividend Experiment. I really like the cut of that guy’s jib!
YouTube and similar platforms make it easy to digest investing concepts, but there is a limit to what you can learn from that type of content.
YouTube videos are optimised for views rather than learning resources, so there is a need to look elsewhere at more formal learning avenues.
Learning more boosts confidence and ultimately leads to smarter decision-making.
Incorporate Flexibility
Market conditions can change rapidly, so it’s important to strike a balance between flexibility and discipline.
Instead of rigid goals, commit to reassessing your strategy as needed while staying consistent with your overall plan.
For example:
Instead of something like “Invest £10,000 in equities,” aim for “Invest £10,000 in a balanced portfolio, while regularly reviewing allocations based on personal risk tolerance and financial goals.”
Flexibility allows you to adapt to changes in the market, such as economic downturns or shifts in interest rates, ensuring your plan remains relevant.
However, discipline is equally vital; it ensures you stick to your core strategy and avoid knee-jerk reactions that could derail your progress.
For instance, regularly contributing to your investment account, even during market volatility, builds long-term resilience and growth.
Balancing adaptability with commitment is the key to achieving sustainable financial goals.
Steps to Keep Financial Goals Throughout the Year
Even the best resolutions can fail without a solid plan to sustain them. Here’s how to stay on track:
Break Financial Goals into Smaller Milestones
Big goals can feel overwhelming, but breaking them into smaller steps makes them achievable.
For example, if your goal is to save £10,000 this year, focus on saving £833 per month or £192 per week.
Breaking down a goal into manageable pieces ensures steady progress and reduces the stress of achieving it all at once.
Additionally, smaller milestones provide frequent opportunities to reassess and celebrate, which keeps motivation high.
Track Progress Regularly
Tracking your progress is critical to staying on course.
Whether you monitor contributions to your savings accounts, assess portfolio performance, or review budgeting practices, regular check-ins provide clarity on how well you are adhering to your goals.
Consistent tracking also allows you to identify any gaps or setbacks early and take corrective action.
Tools like spreadsheets or digital financial trackers can simplify this process, but even manual reviews of your accounts can be effective.
Build Accountability
Sharing your resolutions with someone else can make a significant difference.
Whether it’s a trusted friend, a family member, or a professional advisor, accountability partners can provide encouragement, reminders, and constructive feedback.
For instance, discussing your goals with someone who shares similar financial ambitions can foster mutual support and accountability.
Additionally, scheduled check-ins with a financial advisor can help you stay aligned with your long-term strategy.
Celebrate Wins Along the Way
Recognising your progress and celebrating small victories can make the journey enjoyable and reinforce positive behaviours.
For example, if you successfully max out your yearly savings limit or diversify into a new asset class, take time to acknowledge your efforts.
Celebrating doesn’t have to be extravagant; a simple reward or even reflecting on your achievement can boost morale and motivation.
Regular celebrations ensure that you stay engaged and appreciate the value of incremental successes.
FIRE Reddit
The FIRE (Financial Independence, Retire Early) subreddit is a great place to share and celebrate milestones.
Members frequently post about their achievements, whether it’s reaching a savings goal, achieving a debt payoff milestone, or taking significant steps toward financial independence.
The supportive community provides encouragement and inspiration, helping you stay motivated to keep going on your journey.
The Dividend Temple Discord
The Dividend Temple Discord has a “Big Wins” section where members share their financial milestones.
Whether it’s hitting a new dividend income target, making an important investment, or achieving a long-term goal, this space provides an opportunity to celebrate those victories with like-minded individuals.
Sharing your success in a community like this can boost your motivation and foster a sense of camaraderie as you continue your financial journey.
By sharing your wins in these communities and taking time to celebrate your own progress, you reinforce positive behaviours and remain energised on your path to financial independence.
Conclusion
Financial goals don’t have to be another set of promises that fade over time.
By learning how to set financial goals that stick using clear, actionable, and realistic steps, you can turn your plans into real progress toward financial independence.
Remember, success isn’t about perfection; it’s about consistent improvement.
Start today by setting one clear financial goal and committing to it.
With discipline and a solid strategy, this year can be the one where your financial goals finally stick.