smart spending

Don't make grandiose New Year's resolutions

Highlights
  • Why New Year's Resolutions Fail
  • Sealing the Deal
  • Seeing Resolutions to Completion

At the end of 2007, Jan Johnson and her husband, Kirk, vowed to save $50 a month toward Christmas gifts the following year. The Houston couple had just paid for their November wedding and then were hit with holiday expenses in December.

To avoid the same scenario in 2008, the Johnsons made a New Year's resolution to get ahead on holiday expenses, opening a bank account online and calling it Christmas 2008. Such acts are repeated countless times each January as people try to improve their lives by promising to accomplish something they couldn't do in the past.

It isn't easy.

In the Johnsons' case, they took a finance course at church and religiously wrote a check each month for their Christmas account. As a result, this year's holiday shopping was a breeze.

Jan Johnson credits the couple's success in keeping this resolution with almost-weekly family meetings to review their progress. She says she also was motivated to save even more as she watched the dollars mount in the account.

"It was like a scoreboard for me," Johnson says. "I've already made one payment into our Christmas 2009 account."

While many resolutions fall by the wayside, the Johnsons were able to keep theirs all year. Marcia Brixey, a personal finance expert from Silverdale, Wash., and author of "The Money Therapist: A Woman's Guide to Creating a Healthy Financial Life," said the couple set a strategy and stuck by it.

"They took a course together, decided to make and keep their resolution together and held regular family meetings to see how they were doing," she says. "The Christmas fund is a good idea for anyone. That way, you can buy gifts throughout the year when the items are on sale."

Because the Johnsons successfully made regular payments into the account this year, they are likely to keep that resolution again this year as they gain momentum from their previous accomplishment, Brixey says.

An even better savings strategy might have been to create a monthly payroll deduction to automate payments to the Christmas account. Then the payments would be regular and not require as much effort on the Johnsons' part.

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1. Why New Year's resolutions fail 

People typically make numerous, broad and sometimes oversized resolutions. They want to eliminate credit card debt, increase savings, accumulate enough money for a vacation or remodel the bathroom. Some want to achieve all of the above.

By pledging to make grandiose, sweeping changes in the new year, you are almost certain to fail, says Simon Rego, associate director of psychology training at the Montefiore Medical Center in the Bronx, N.Y.

"In 2009, we'll have multiple demands put on us, probably more so than ever," says Rego. "If we set small, simple goals, we have a much better shot at success."

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