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6 tips to keep your New Year's resolutions

Key takeaways

  • Make your goals specific and commit to a detailed plan. Using physical reminders like notes around your house, labels on accounts, or calendar reminders can keep you on track.
  • Schedule time to make financial decisions.
  • Have a plan for avoiding common money pitfalls like fear of loss. You may be able to sidestep it by working with a financial professional.
  • Automate as much as you can to make financial housekeeping easier and to stick with your plan.

If 2022 left you feeling financially battered, you're not alone. Over a third of Americans say they're in a worse financial situation than last year and more than half of them (58%), pin the blame on inflation, according to Fidelity’s 2023 New Year’s Financial Resolutions Study.*

Despite the challenges, two-thirds of people say they are making financial New Year's resolutions for 2023. Some people are scaling back their ambitions after the events of recent years and say they plan to set more realistic and achievable goals for the new year. To that end, more Americans say they are focused on short-term objectives like paying off credit cards or building emergency savings (53%) than those who are prioritizing long-term goals like retirement or a child's education (47%).

Setting goals and making a plan to reach them can be critical to improving your financial well-being. The good news is that you may be able to stack the deck in your favor with some easy mind hacks.

Psychologists and behavioral economists have studied people's behavior around money for decades. All that research has turned up some steps you can take to help support your goals. Here are 6 of our favorites.

1. Pre-commit: Make your goal very specific

Let's say your goal is to get physically fit. To get there, make a very specific plan and reinforce it with supporting actions.

Here's what that means: If your goal is to go to the gym every day at 8 a.m., set an alarm to remind yourself to go to bed on time and wake up early, set out your workout clothes and shoes the night before, and have coffee or water ready. There's less opportunity to think too much or bail out once you've smoothed the way for success.

Expecting a tax refund? Committing to exactly what to do with the money beforehand will help you make it happen. "Research shows that when people commit to saving early (before they've gotten the money) they do it. It's more difficult once the money is in hand and there are bills to pay. By pre-committing, it doesn't feel like free money—it's already going to something," says Huma Khan, a director of behavioral science at Fidelity.

Fidelity can help you create a free plan based on what matters most to you. Learn how we can help you take action: Plan for today, feel prepped for tomorrow

2. Earmark money for specific purposes with a tangible reminder

A recent study found that putting cash into a sealed envelope and writing the purpose on the envelope made saving easier.

"It's harder to take the money out and use it for something else. There's a mental and emotional hesitancy," says Etinosa Agbonlahor, a director of behavioral science at Fidelity.

You can use an envelope, a box, or even an earmarked bank or brokerage account. Many banks or financial services firms let you label your accounts and that can help reinforce your decisions as you spend and save.

3. Schedule time for finances

If you're waiting for the perfect time to feel ready to do some financial housekeeping, it may never come.

"If you want something to happen—put a date on it," says Nathan Young, PhD, behavioral research scientist at Fidelity. "People are bad at forecasting when they would feel good about doing something but making an appointment with yourself can help you pre-commit to doing the work you may have put off."

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4. Know your money personality

Are you an adventurer who constantly searches for the next hot stock to buy or a creature of habit who likes to stick with what has worked for you in the past? Both have positive aspects as well as downsides. Knowing your tendencies toward money can help you rein in risky behavior and play to your strengths.

Learn more about yourself: Fidelity's Money Personality Quiz

5. Know your money biases

As we navigate the world, making decisions and choosing our paths, our thoughts fall into predictable patterns. Psychologists call these innate preferences and automatic reactions biases—and they can be costly.

One such bias is called anchoring. Here’s an example: You walk into a store planning to buy a coffee pot and the first one you see costs $800. That's a steep price for a plain coffee maker but you find one that costs $200 and that seems like a deal once that $800 figure is anchored in your mind.

The best way to avoid this kind of mental trap is with knowledge and planning. In this case, it could make sense to have a range of costs in your head that you're willing to pay before going into the store (or onto the website). If you think about your preferences before making choices, you may find yourself less influenced by the options.

Loss aversion is another potentially expensive bias. The fear of loss can be more motivating than potential gains, but avoiding losses at all costs can be, well, costly. For long-term investors, the stakes are high—investing too conservatively can undermine your ability to reach retirement goals or pay for a child's education.

There are ways to combat this one too. Staying focused on your goals, understanding the history of the stock market, and tuning out anxiety-provoking news can help. Getting professional help with your investments can be reassuring as well with options ranging from working with a financial consultant or using a professionally managed investment option like a target date fund or a managed account.

To learn more about mental biases and how to short-circuit them, read Viewpoints on 6 biggest pitfalls for investors

6. Put saving and investing on autopilot

Automatic saving is the practice of contributing money to your investment accounts on a regular basis through direct deposit from your paycheck or recurring bank transfers. The idea is to establish this routine of saving and investing regularly with no extra effort on your part.

Making it automatic can help keep your savings plan on track no matter what else is going on in your life. Not only can you make saving automatic, you may be able to make investing automatic as well. That can help you avoid tinkering with your investments or trying to time the market as it ebbs and flows.

Not all investments offer automatic investing but hands-off options tend to—like robo advisors and other managed accounts. Also, at Fidelity, you can set up automatic investmentsLog In Required into funds you already own in your brokerage, retirement, 529 savings, or other eligible retail Fidelity accounts.

Building great habits doesn't happen overnight but a little planning can set you up for success in the new year.

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This information is intended to be educational and is not tailored to the investment needs of any specific investor.

* Fidelity Investments’ 14th Annual New Year’s Financial Resolutions Study: This study presents the findings of a national online survey, consisting of 3,020 adults,18 years of age and older. The generations are defined as: Baby Boomers (ages 58–76), Gen X (ages 42–57), millennials (ages 26–41), and Gen Z (ages 18–25; although this generation has a wider range, we only surveyed adults for the purposes of this survey). Interviewing for this CARAVAN ® Survey was conducted October 17–23, 2022 by Big Village, which is not affiliated with Fidelity Investments. The results of this survey may not be representative of all adults meeting the same criteria as those surveyed for this study.

Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Target Date Funds are an asset mix of stocks, bonds and other investments that automatically becomes more conservative as the fund approaches its target retirement date and beyond. Principal invested is not guaranteed.

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