Just because you’ve already quit — or never started — a New Year’s resolution to save more money doesn’t mean it’s all over. You can make a comeback with a few key steps.
Here are some typical ways people stray from savings goals, as well as simple fixes to get back on track.
Glitch No. 1: You never started
All the time spent at home in the past year may have motivated you to save for a fabulous, post-pandemic trip — but you never made a clear plan. Identifying that you need a chunk of money for your dream vacation is just the first step.
The fix: Make your savings goal specific. "Goals that don’t have something tangible attached to them are the ones that are broken most easily," says Brett Tharp, a certified financial planner and analyst at eMoney Advisor in Radnor, Pennsylvania.
Having a travel fund is less compelling than specifying that you need $5,000 for a two-week trip to Europe in summer 2022, for example. Be explicit that you’re saving for airfare to Barcelona, Spain, train tickets to and from Prague, plus accommodation, dining and entertainment, and set a budget for each.
Creating weekly and monthly goals can ensure that you’ll have enough cash come vacation time.
Glitch No. 2: Your goal wasn’t realistic
You might’ve planned to save too much or given yourself too little time to meet your goal. Making an extreme resolution can set you up for disappointment.
"It’s like deciding that you are going to start running as a New Year’s resolution, and [then trying] to run a full marathon on January 1," says Julie Beauchamp-Orlowski, a financial advisor at Wells Fargo Advisors in Farmington, Connecticut.
The fix: Start small. You might not yet be able to save 20% of your income, but maybe you can contribute enough to your 401(k) to get the full company match.
"Once you get some early wins, that’ll get you some confidence and sense of achievement," Tharp says.
And meeting smaller goals will help you get closer to bigger goals, whether that’s saving more of your income, earlier retirement or something else.
Glitch No. 3: You went over your budget
Along with his girlfriend, Jared Nutt, a web developer in Los Angeles, had a goal to limit food spending (including takeout and groceries) to $800 per month. Anything over that budget eats into their savings.
"We've already hit that amount and there’s still nine days left in the month," Nutt said in January. "Really it comes down to impulse control, which is difficult when getting takeout is one of the only joys during this pandemic."
The fix: Automate your savings. "Make saving as easy as possible," says Trevor Ward, a Salt Lake City-based accountant and investment advisor at Kinetic Financial. "I recommend setting up regular, automatic deposits into a separate high-yield savings account. This way saving isn’t dependent on sticking to a strict budget and hoping something is left over."
An app for tracking your spending and savings could be helpful, too. Nutt says he’s now using one to aggregate all of his household’s expenses and keep him from impulsive spending.
Glitch No. 4: You didn’t prepare for the unexpected
Maybe you blew your savings goal because of unforeseen car troubles or a home repair. If you didn’t make room in your financial plan for unexpected expenses, you likely resorted to spending money meant for your goal.
The fix: Have a plan for the unknown. Designate some savings for life’s unanticipated events. Have an emergency fund to cover these random costs and expenses, and keep it separate from funds for your specific savings goal.
And when you get pleasant surprises — such as a tax refund, a relief check or reclaimed lost funds — have a plan for that money, too. You can make a rule, for example, that windfalls will go toward building up your emergency fund or will be split between an emergency fund and vacation savings.
Get to your goal with the right savings account
Whether you missed your start date or spent more than you intended, it’s never too late to begin saving or get back on track. Building up your funds is more achievable when you use the right money tools, like an account that helps you earn interest and get the best savings rates available.
A previous version of this article misattributed a quote from a representative of Wells Fargo Advisors. The quote is from Julie Beauchamp-Orlowski, a financial advisor in Farmington, Connecticut. This article has been corrected.