How to set financial goals you will actually keep

A common New Year’s tradition is resolving to improve your finances. Alas, falling short of those good intentions is also common. Here’s how to stick with your goals once and for all.

If you’re energized to pay down debt, save more for retirement or make a fresh start on another financial goal in the new year, you’ve got plenty of company. More than two-thirds of Americans set a financial resolution in January. Yet maintaining momentum can be tough: One survey found that only about half of goal-setters actually achieved their financial resolutions.

That doesn’t surprise Yasmin Ghodse-Elahi, a behavioral scientist at U.S. Bank. She says our brains are hardwired to have an “intention-action” gap. That is, we don’t lack goals, just a winning strategy for how to achieve them. “That’s just human nature,” she says. “We have to build a bridge over the abyss between our intentions and our actions.”

Here’s how to push past your mental hurdles and create a plan for sticking with your financial goals.

Take a hard look at your list of goals

You may have multiple financial goals on your 2024 to-do list — that’s commendable, but keep in mind that an overly ambitious agenda could be setting you up for failure. When you have more than one goal, it can be hard to track your progress and stay motivated.

“It’s great to want to accomplish a lot of goals, but it can be overwhelming,” Ghodse-Elahi says. “The stress may lead you to abandon your resolutions altogether.”

Hone your list to a manageable mix of the non-negotiable must-dos, like building up your emergency savings, Ghodse-Elahi suggests, “and then focus on the things that are meaningful to you.” Maybe that’s saving up for a vacation or paying down more of your credit card balance. Those are the goals that come packed with plenty of psychological motivation, which may help you keep going when things get tough.

Think short term, even with long-term goals

Major goals should be part of your plan, but the secret to success is to break them into smaller pieces. “A goal of wanting to pay down $10,000 in credit card debt this year is great, but it can be daunting,” says Erika Wasserman, a certified financial therapist.

Her advice is to turn an intimidating long-term goal into something more bite-size: “Instead of paying off $10,000 in debt this year, make your goal to pay down $2,500 a quarter. That seems much more doable.”

One study found that when people were offered the choice of putting aside $5 a day, $35 a week or $150 a month, the $5 option was the most popular, even though all three add up to the same amount each month.

Ghodse-Elahi says building short-term milestones into your longer-term goal is a sneaky way to give yourself psychological wins. “It’s like in a video game. When you complete a level you kind of feel rewarded,” she says. And that delivers a new jolt of motivation to reach the finish line.

Make savings automatic

Because goals often play out over years and decades, not days — hello, retirement — persistence is key. That’s where automated tools can help you stay on track. “We’re fallible, so don’t leave this up to yourself,” Ghodse-Elahi says. “Automate as much as possible.”

Want to build up your emergency savings? Set up an automatic transfer to a savings account every time your paycheck hits your checking account. Want to contribute to a Roth IRA? Use the same automated system to move money to your IRA monthly or quarterly. The more you can take a goal off your hands, the easier it will be.

Build a closer relationship with future you

Many financial goals center on making choices that will only pay off years from now — for example, by not spending money today, you’ll have more in retirement. Delayed gratification is tough, but what makes it even more challenging is that, according to research by Stanford University, we see our future self as a stranger rather than an extension of who we are.

“If we can become more empathetic to our future self, it can help us stay on track with financial goals that will benefit that person,” says Victor Ricciardi, a visiting finance professor at Ursinus College and co-author of the book Advanced Introduction to Behavioral Finance.

So how do you do that? Research has shown that picturing an older you might help. In fact, college students who saw a doctored image of their much older self were motivated to save more for retirement than students who didn’t come face-to-face with their future. You can do this with FaceApp or Snap Chat’s aging filter.

Another method is writing a letter to future you. In one study, people who wrote a letter to themselves 20 years down the line exercised more than those who wrote a letter to themselves three months in the future. You can do this at futureme.org. 

Picture what you’re aiming for

In addition to visualizing your future self, you should also try envisioning (on a daily basis) the reward your goal will produce. If you’re saving for a home, set a photo of your dream home as your cell phone’s background to keep the goal front and center. “The more it becomes part of your world, the more you will likely want to stay committed,” Wasserman says.

Don’t keep it to yourself

Recruit a close friend to be your goal buddy, Ghodse-Elahi suggests. “Studies have shown that having shared goals can make us feel more committed,” she says. When you both hit a goal milestone, find a budget-friendly way to celebrate. If one of you slips? Build in an annoying yet playful penalty.

If you want to add some structure to this, check out stickk.com, a website that enables you to put a goal in writing. The site notes that people who enlist a commitment buddy or referee are more likely to stick with a goal — and that instituting a sort of punishment should someone fall short increases success rates.

Whether you try one or all of these tips, the start of a new year is a great time to establish positive money habits and set (or re-commit to) your financial goals.