Make money resolutions that stick

Millions of us try to start the new year afresh with resolutions that tackle areas of discontent in our lives. When it comes to finances, many pledge to turn over a new leaf. While this may feel proactive and hopeful, our research shows just under one in five of us who make a financial resolution³ can’t make it last even a week. And only one in six last more than a year.

So it’s likely you could have a disheartened and discontent workforce heading into the new year. Fortunately, there are five techniques you can share with employees that will help them stick to their financial resolutions.

1. Be specific

If you make a general pledge to spend less with no real focus, it’s unlikely to be successful. Start by drawing up a budget of everything you spend and everything you earn. Your banking app may feature spending categories, or you can look through past statements.

This should help you identify where you’re overspending, so you can make a specific pledge – like to cancel a gym membership or stop buying clothes on payday.

2. Change one thing

Completely transforming your life overnight isn’t sustainable. It’s far better to set clear, achievable goals, one at a time.

The HL Five to Thrive framework shows any expensive short-term debts should be your priority. Next is protecting your family with things like insurance and a will, before moving onto building emergency savings and saving for the future.

Your resolution will depend on where you are on this path, but don’t try to do everything at once.

3. Give up the things you don’t like first

Sacrificing things like takeaway coffee seems like an obvious choice, because it’s a luxury we don’t actually need. But by giving up the little things that bring joy to your day, you’re likely to struggle and may fail to see your resolution through.

Before sacrificing the things you love, think about the things which bring you less joy – like overpaying for your mobile phone or broadband or buying expensive grocery brands.

4. Do the right thing automatically

Positive changes can be set up to happen without you thinking about it. If you need to build your savings, set up a direct debit to go into a savings account each month. If you can, set it to come out of your account on payday – before you have a chance to miss it – so you automatically do the right thing every month.

Or if one of your resolutions is to start investing, a great option is setting up a direct debit into an investment account. An investment account is a bit like a basket – it isn’t an investment in its own right. It’s where you hold any investments, like funds or shares which you choose to purchase.

And often you can choose for your direct debit to automatically invest into particular holdings every month. The automation takes the effort out of remembering to pay in each month, and helps you to consistently build a portfolio. Just pay what you can – you can start with as little as £25 when investing in an HL account.

Keep in mind that unlike the security offered by cash, investments can go down as well as up in value, so you could get back less than you invest.

5. Be realistic

If you set unrealistic goals and put pressure on yourself to achieve them, you’ll soon run out of momentum. Try to be honest with yourself and set smaller, more realistic goals.

So rather than pledging to overhaul your finances as one resolution, you could save a sensible, affordable sum every month to pay off debts or gradually build emergency savings. Or if one of your goals is to save for the long term, it can be worth paying more into your pension if you can afford to. But keep in mind you can’t normally access money in your pension until you’re 55 (57 from 2028).

With these small steps, you’re more likely to achieve your goals and you’ll be encouraged to maintain positive, long-term changes.

So when next year rolls around, you won’t be bemoaning another set of failed resolutions.

This article is not personal advice. If you are unsure of a course of action, please ask about advice.

*Figures from HL Opinium Survey, October 2023.

¹ 1851 respondents

² 2000 respondents

³ 846 respondents

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