Yes, Financial Resolutions for the New Year Do Work

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Where's The Money? Getting Your Finances in Order

We all know the drill by now: Make a New Year's resolution to lose weight or reduce spending or finally finish that novel. Fail in miserable fashion. Feel bad about yourself and scarf down a tub of double-chocolate ice cream.

It is enough to make you want to throw your hands up and not make resolutions at all. Like Cheryl Chen, a freelance writer in southern California.

"I used to do New Year's resolutions, and then never kept them," said Chen, 27, who stopped making resolutions altogether around three years ago. "I don't see the point in all the pressure. Everyone is always asking about them."

But before you swear off resolutions forever, check out new data from mutual fund manager Fidelity Investments. Fidelity's just-released New Year's Resolutions study discovered that making financial resolutions does, in fact, help get your fiscal house in order.

In fact, of those who nearly or completely achieved their resolution for this year, 56 percent said their finances had improved. Of those who fell short, only 34 percent reported better money circumstances.

"Financial resolutions are actually relatively easy to achieve," said John Sweeney, Fidelity's executive vice president for retirement and investing strategies. "With diet or exercise, you have to get up every single morning and resolve all over again, but with something like a 401(k) payroll deduction, you just set it up once at the beginning of the year, and then it becomes part of your lifestyle."

In the Fidelity survey, 37 percent of those surveyed planned on making financial resolutions for Jan. 1, up from 31 percent last year.

The top three financial resolutions: "saving more," cited by 54 percent of respondents; "spending less," with 19 percent, and "paying off debt," with 16 percent.

The secret fears driving those money resolutions? Most said unexpected expenses, the economy and healthcare costs in retirement.

All the financial pledges in the world will not mean a thing if you have no firm strategy for how to pull them off. So how do you go from resolution to actual achievement?

It comes down to forming an action plan.

"If it's a few seconds to New Year's and you're just throwing something up in the wind, then it's not going to work," said Dr. John Norcross, a psychology professor at the University of Scranton who has conducted multiple studies on the subject. "It requires preparation. You have to be serious about the endeavor."

For those who are dedicated to their goal, the statistics are pretty impressive: Norcross found that 46 percent of people were able to keep their resolution for at least six months.

"We actually stopped doing the study, because we found the exact same thing every time," Norcross said. "People should be comforted that achieving your resolutions is possible."

His main trick for success? Deliberately design your life so that you are more likely to succeed and not just rely on willpower alone. That means making realistic and attainable goals, publicly declaring them so that others will encourage and help you, and rewarding yourself for your successes.

It also means tracking your progress, avoiding environments where you will fail (if you are trying to lose weight, don't walk by that French patisserie), and allowing yourself the occasional slip-up, Norcross said. Draw up a specific plan in place for when you screw up, and gobble down a donut or two.

After about three months, the new routine will have taken over and your behaviors will become automatic.

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