Who doesn’t like a fresh start?  The beauty of New Year’s Resolutions is that we all have an opportunity to fully commit to losing weight, getting organized, or finally saving more money at the turn of the calendar year. 

In fact, resolving to change one’s life for the better is a tradition that goes back millennia, starting with the ancient Babylonian 12-day New Year’s celebration.  During the Akitu festival, Babylonians promised the gods to return borrowed items and pay down their debts.  In more recent developments, some historians note clippings from an 1813 Boston newspaper documenting what could be considered the first contemporary use of the “New Year’s Resolution”:

“And yet, I believe there are multitudes of people, accustomed to receive injunctions of new year resolutions, who will sin all the month of December, with a serious determination of beginning the new year with new resolutions and new behavior, and with the full belief that they shall thus expiate and wipe away all their former faults.”

Whatever the origin of this tradition, the fact is that many of us will create financial resolutions in the coming days only to find those well-intentioned goals falling short soon after they’re conceived.  One study from sports company Strava, using over 800 million user-logged activities in 2019, found that individuals are likely to give up on their fitness goals by January 19 – less than three weeks into the start of the New Year.

Another study from Scranton University found that only roughly 19% of individuals keep their resolutions for the year.  The data go on to show that the majority of New Year’s resolutions are abandoned by mid-January, confirming findings from many different studies.

Whether you want to admit it or not, the chances are that the work you’re about to put into one or more of your financial resolutions this year likely will soon end in frustration and disappointment.  So, what can you do to ensure that your financial resolutions stay on the right track heading into the New Year?  Well, one way is to focus your goals on “becoming” rather than “doing.”

Becoming Rather than Doing

Let’s face it: the past two years have derailed many of our New Year’s resolutions and life goals as we’ve rightfully focused on doing everything necessary to keep ourselves and our loved ones safe.  Even so, heading into year three of this healthcare crisis, many of us have a choice to set our sights on a bigger goal of thriving financially rather than surviving in day-to-day uncertainty. 

While external circumstances can be a reason for goal failure, they can also be an excuse for not getting to the heart of what’s preventing long-term success with your financial plans.  And quite often, that roadblock is being focused on “doing” the work necessary to achieve a goal, rather than first taking the time to understand who you need to “become” to make your New Year’s Resolution a reality. 

Indeed, some individuals will suggest that the way to improve your odds of achieving your resolution is to ensure that you’re defining SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound).  While SMART goals are important, more often than not, what many well-intentioned individuals miss is what needs to happen before specific goal setting begins.  And that is asking yourself: “who do I need to become this year to make my financial resolutions a reality?”

Zindel Segal, The Difference Between “Being” and “Doing”

One school of thought suggests that individuals operate in two modes: “Doing” and “Being”.  The Doing Mode individual is focused on explicitly defining a goal, then developing a system to monitor their progress and striving for the future outcome they’re attempting to achieve.  Whether it’s a reward that you plan to give yourself for accomplishing the goal – or a threat, like the potential shame experienced from friends and family – quite often, this carrot and stick approach sets the stage for a possible resolution failure.

When you shift your approach to accomplishing resolutions from Doing Mode to Being Mode, there’s a broader sense of aligning your daily actions, choices, and behaviors with who you are as an individual.  When you approach your goals from a Being Mode, saving more money or investing in a disciplined manner isn’t a task, it’s a way of life – you’re simply doing what’s natural for who you are as an individual.  When positive developments or setbacks occur, they’re viewed as part of the natural process of being rather than a good or bad outcome.

This approach to Being is essential because when your New Year’s resolution is at odds with who you believe yourself to be, you’re more likely to experience self-sabotage and reject the “new” habits you’ve identified for yourself.  Such a disconnect often leads to what psychologists call cognitive dissonance or the mental anguish of holding two competing thoughts simultaneously.  Fortunately, becoming the person who does the desired behaviors is one way to overcome this resistance.

Dealing with Resistance

At first glance, many individuals will dismiss the notion of “becoming” and state that what’s needed is focus, discipline, and a firm commitment to accomplishing goals.  While there’s some truth to this notion, again, the reality is that your subconscious mind does not like to engage in habits or behaviors that conflict with your identity. 

…once you’ve identified who you want to become, achieving your New Year’s Resolution continues to progress by aligning your daily habits with the outcomes necessary to become the person you need to be.

For example, a New Year’s resolution to become more disciplined with your household spending could quickly become derailed if you don’t intrinsically believe that you’re a good steward of your finances.  Indeed, your first misstep after setting a financially prudent resolution likely could prompt negative internal dialogue like, “I’m not good with money” or “I’ll never be good with money, so what’s the point of trying to save.”  When this disconnect arises, it potentially could lead you to abandon a worthwhile goal for the coming year. 

So, how can you overcome this negative self-talk and self-sabotaging behavior?  Well, one way to overcome cognitive dissonance is to either 1) change your thoughts, 2) change your behavior, or 3) justify your behavior by adding new thoughts.  In his book, Atomic Habits, James Clear points out how we are likely to meet resistance when we start new habits inconsistent with our self-image.

For example, a couch potato could have an ambitious goal of completing a marathon in the coming year.  Certainly, willpower and self-discipline likely will lead to some progress initially, that is, until that individual begins to experience setbacks, like an injury or scheduling conflict, naturally leading them to give up on their goal to run a marathon. 

Cast differently, if your goal is to become a runner (rather than accomplishing a running feat, like a marathon), then the daily one-percent improvements that Clear outlines in his book naturally will lead you to get in the kind of shape you need to compete in a marathon.

From this perspective, once you’ve identified who you want to become, achieving your New Year’s Resolution continues to progress by aligning your daily habits with the outcomes necessary to become the person you need to be.  How is this accomplished? 

Well, Clear refers to the work necessary as the Four Laws of Behavior Change:

  1. Make it Obvious – list all the steps that need to happen to make your new habit a reality
  2. Make it Attractive – link your new routine with behaviors that you already enjoy doing
  3. Make it Easy – simplify your environment to make your new habit easy to accomplish
  4. Make it Satisfying – create intrinsic rewards when you complete behaviors that align with your identity

Starting with this approach could help you overcome resistance as you put in the work to become the person you want to be this year and accomplish essential life goals.  Now it’s easy to say that an individual who wants to run a marathon should focus on becoming a runner first.

So, who does an individual need to become to save more money or become a more disciplined investor?  From this perspective, consider becoming the master of your financial independence journey.

Becoming the Master of Your Financial Independence Journey

In the simplest terms, financial independence represents a state of financial well-being where you have enough money to pursue experiences of utmost value.  Unless you’re already retired or anticipating a financial windfall, becoming financially independent requires a daily discipline of creating, growing, and preserving financial wealth. 

…a deliberate lack of understanding of what intrinsically motivates you might leave you feeling stuck in a perpetual cycle of earning and spending more but making little headway towards long-term financial goals.

Considering the journey itself, the path to mastery (financial independence) forces you to think outside of the constraints of the money scripts presented to you by other people.  Indeed, pursuing those experiences that satisfy feelings core your value system can activate higher levels of intrinsic motivation and potentially reduce the yo-yo effect of unconscious savings and spending decisions.

What’s more, the journey itself becomes transformative.  For example, each step in the wealth-building process (creating, growing, and preserving wealth) serves an explicit role in helping you move toward financial independence.

Each of these steps requires you to learn disciplines that enable you to build wealth for the long term.  And because the knowledge you’re gaining serves an intrinsically defined purpose, its application likely will have a more profound impact on your achieving financial independence than learning money management techniques simply for the sake of knowledge or to mark off a completed resolution for the year.

Many individuals see their financial choices as discrete win/lose outcomes when it comes down to it.  They think of their behaviors as things that need to be done.  And more often than not, people play the game of life not to lose: settling for comfort rather than striving for a goal for which they may fail.  They’re looking for quick fixes, temporary relief to get them through their day.

While this approach may work initially, a deliberate lack of understanding of what intrinsically motivates you might leave you feeling stuck in a perpetual cycle of earning and spending more but making little headway towards long-term financial goals.

Whether you’re earning six figures and broke, or simply trying to take control of your finances, doing the work of learning a new financial management technique, determining your “retirement number” or achieving some material outcome may not be the approach you need.

What might better suit your situation and help you stay committed to and crush your New Year’s resolution is reframing your relationship with money, rewriting your money scripts, and becoming the master of your financial independence journey.