You CAN stick with New Year cash resolutions – should you keep away from these widespread errors, reveals VICKY REYNAL

Every year I see clients who have made New Year resolutions, in their words, ‘to be better’ with money. And every single year they find themselves failing by February, after procrastinating over key financial decisions relating to their pensions, savings and budget.

Their key concern is that they spend more than they should – a worry that bears heavily on them especially after a lavish Christmas.

The result is that they end up feeling stuck, fearful of moving forward and worried about examining what is stopping them. This in turn makes them feel embarrassed and ashamed, in other words, this paralysis is proof that they are ‘bad with money’.

The good news is that you can handle your finances better and you should never stop trying. And if you have failed in the past, then I invite you to try something different this year.

Here are the four reasons why, in my experience, your New Year financial resolutions fail – and how you can stick to them this time.

The good news is that you can handle your finances better and you should never stop trying, writes Vicky Reynal

THE RESOLUTION IS. . . TOO VAGUE

What does ‘being better with money’ actually mean to you? Start with breaking down what you want to do into concrete, actionable steps. For example, if being ‘better’ means improving savings, set specific goals.

Download a savings app, research high-interest accounts, or automate transfers of a certain amount per month. These are solid objectives which might make your target feel less overwhelming and more manageable.

Sometimes, we keep money goals vague because we are afraid of the unknown. These concerns can be because of gaps in our knowledge or of technical terms which we don’t understand fully.

However, breaking down goals into small steps, will decrease your anxiety and engage your sense of being able to achieve.

. . . TOO COMPLICATED TO KEEP UP WITH

If your resolution is too complicated, it makes it unsustainable in the long term.

Signing up to complex tools or plans can be abandoned quickly. I have had clients use budgeting tools that are too complicated or require too much input and are abandoned after a few weeks.

How can you avoid this? Ask yourself how will I use the information? If tracking every single expense across 30 categories is just ‘good to know’, it’s likely not worth your effort. Instead, focus on broad categories – such as groceries or subscriptions, and use the tools to identify trends such as spending too much on eating out.

If you need to investigate the reason for overspending, you can check your accounts directly for more details.

Then find the right tools for what you need. Use apps that automatically categorise expenses rather than rely on manual spreadsheets.

Simpler systems are easier to maintain in the long term. Remember, the more energy the new system takes to keep up, the less likely you are to sustain it.

. . . UNREALISTIC SAVINGS TARGETS

If you try to change too much, too soon, this might lead you to give up on your resolution because it feels too hard, whether you are trying to scale back expensive lifestyle creep, or aiming to organise your future by addressing your pension and other investments. Set gradual objectives that feel manageable instead of rushing into drastic solutions like cutting all non-essential expenses on day one or overly ambitious targets like wanting to sort your Isa, pension, and investments in the first few weeks.

Failure fuels shame – which fuels inaction or a desire to give up, so making goals realistic is crucial.

. . . DOESN’T DEAL WITH UNDERLYING PROBLEM

Even the best budgeting app won’t stop you from overspending if you tend to use ‘retail therapy’ to deal with anxiety or boredom, loneliness or sadness.

And even the swankiest savings platform cannot do the work for you if you don’t overcome fears related to, for example, watching your parents lose all their savings in a bad investment.

My point is that sometimes it isn’t a lack of will or tools that makes resolutions fail, but the fact that you have yet to deal with the underlying feelings that were driving our financial choices or inaction in the first place.