Three Tools to Help You Stick to Your 2017 Financial Planning Resolutions

Happy New Year everyone!

I hope the start of your 2017 has been fantastic. This is my first week in work mode, after spending some extra time hanging out with Ben while he was off from school. I’m more excited than ever to get back in my routine and start knocking off my goals for this year.

The New Year usually inspires resolutions in many spheres — health, relationships and of course, money. This January, I’d like to give you some tools to help you set achievable goals and stick to them throughout the year.

This week, I start with three foundational techniques that can help keep you motivated to reach your goals even when times are tough.


#1: Know Your Why

Before you can know what you want to accomplish financially, you need to understand why.  After all, the most important part of creating a plan is to know why you’re planning.  As I’ve discussed before, an effective goal needs to be specific, have one or more timeframes and be measurable. However, you also need to think about your true motivation for wanting to achieve the goals that you’ve chosen.

To start the process, I ask, “Why is money important to you?”

Like all of us, you seek and use money for a purpose. You trade your time, energy and money to get an education or develop a skill that has led to your current career path. With the money that you make from that career, you’ve chosen to spend or save it in a certain way.  Why is that?

My guess is it’s not just to survive. If that were the case, it wouldn’t really matter what job that you had. You almost certainly have a deeper desire that’s driven you to where you are today. Keep that Why in mind whenever you’re asked to make a decision or a trade-off. It will help you focus on whether that choice really serves your underlying needs.

Carl Richards nicely summarizes this theory in his book The One Page Financial Plan:

Often, the process of asking Why? – “Why is money important to me? Or “Why have I been so anxious about money lately? Or “just why do I work so hard anyway?” uncovers deep desires and fears that we are often too busy or too scared to think about.”

It’s time to lean into your fears.

What motivates you? Do you want money so your family can be comfortable and not have to worry about going without? Does money allow you the freedom to travel or enjoy other luxuries as you please?

Take the time to figure out your Why. Keep asking it until you have a concrete answer. Don’t stop with generalities like “freedom” or “security.” Freedom to do what? What about having money makes you feel secure?  If you’re having trouble answering the question, review how you spend your time, energy and money now to determine what really motivates you.


#2: Know What Not Planning Will Cost You

I’ve often found that prospective clients really have hard time seeing the value of financial planning at first. Many of the benefits of planning take time to materialize.

Yet most people know that they should be doing something. They know that planning is important but aren’t quite sure why. In that scenario, I like to show what not planning or procrastinating actually costs them.

First and foremost, it’s costing you money. Here’s a chart from JP Morgan’s 2016 Guide to Retirement that compares how much four different people can save by putting away $10,000 a year and retiring at 65:

  • Chloe invests from 25 to 65 ($400,000 total) and earns a 6.5%. She ends up with $1,870,840.
  • Quincy invests from ages 25 to 35 ($100,000 total), earning 6.5%. He ends up with $950,588.
  • Lyla invests from 35 to 65 ($300,000 total), at the same 6.5% earnings rate, and ends up with $919,892.
  • Noah saves from 25 to 65 in cash ($400,000 total) earning 2.25% ends up with $652,214.

The main takeaway is that the sooner you start, the more you’ll have.  For instance, Chloe has over $1.2 million more than Noah, despite saving the same amount of money. Quincy invests the least and still has more money just by starting earlier than Lyla and Noah who invested 3 or 4 times as much as he did. Even if you’re not investing $10,000 a year, continuing to delay proper planning can end up costing you hundreds of thousands of dollars.

And it’s not just investing. When I show my clients their last six months of spending based on their credit card and bank transactions, many are shocked that they spend so much on things that they don’t even value.  I’ve also had clients miss out on their 401k employer match, misjudge the overall costs of their health insurance or realize too late just how much the interest on their student loans is costing them.

Lastly, procrastinating adds stress, especially when you are trying to plan with someone else. The anxiety, arguments and frustration eats into your mental energy.  You could be enjoying your life, but instead you’re worrying about your money.

Simply put, not planning costs you tangibly in real dollars and intangibly in your time, energy and sanity.

#3: Take Action and Find a Partner to Keep You Accountable

In a recent podcast, I talked about how uncertainty breeds fear, and fear breeds inaction. You may feel you don’t know where to start. You may think there’s something you need to do before you take action.  But not taking action has consequences.  You miss opportunities. You have less time to reach your goals.  And you may end up with substantially less money than if you started right now.

Don’t let past behavior or mistakes, keep you from taking action. Once you know your Why and what your delay is costing you, you should have all of the motivation that you need to get started.

Additionally, if you’re starting an exercise program, you’ll probably be more successful if you find a work out buddy.  If you begin a new diet, it helps to enlist a friend to keep you on track.  It’s the same with financial planning.  It helps to have a partner – someone to keep you accountable. This person could be a friend, spouse or advisor. Whoever you choose, make sure that person understands what you’re trying to accomplish and how they can help get you there. You can likely help them in return.

A caveat here: be careful of having a partner that allows you to put off planning. I’ve seen many couples who tend to be mutually complicit in procrastination. I have also experienced this first hand with me and Ben.

We would tend to push or avoid conversations about bills and planning, despite me sending him a detailed spreadsheet of our financial life monthly.  The prospect of a money fight, due to our different styles of handling finances, or additional feelings of hurt and anxiety prevented us from really being on the same page. We finally decided to use an objective third party, which did wonders for keeping us motivated and on task.

With the start of the New Year, now is the time to move forward.


I hope you find these tips helpful as you refine your 2017 goals and keep you working towards them.  As always, I would love to hear what is and what’s not working for you. Let me know here, on Twitter or Facebook how your resolutions are shaping up and you’re your doing to stick to them in 2017.