3 Reasons Why New Year's Financial Resolutions Fail

It's that time of year again -- when I look at the calendar and muse aloud, "Where did this year go?!" It's time to wrap up work tasks before the end-of-year slowdown, put the finishing touches on your holiday gift list, and really dig into any New Year's resolutions you might be considering.

Making resolutions around money is common -- two-thirds of those surveyed by The Ascent about New Year's financial resolutions for 2024 intend to set one. But just because you start the new year with a goal doesn't mean you're guaranteed to achieve it. Here are a few reasons you might fall short of your New Year's financial resolutions.

1. You aimed too high

Far be it from me to tell people to moderate their New Year's resolutions -- but there is such a thing as being too ambitious. After all, your resolutions should be possible if you hope to actually achieve them. My resolution for 2023 was to save $50,000 toward the purchase of a house, and for many people, this would be an absolutely bonkers goal.

But I knew that it was possible for me (especially because I was able to start saving before 2022 was over, and I knew that if I needed extra time to reach the target at the beginning of 2024, that would also be OK). I ran the numbers, and I knew what I'd need to do to make that $50,000 goal happen.

If you have an ambitious goal for your finances in 2024, I'm not trying to dissuade you. But it is worth taking the time to do the math and see if your target is SMART -- Specific, Measurable, Achievable, Relevant, and Time-Bound. This is a great approach to setting (and achieving) goals. Let's say you're hoping to pay off $20,000 in credit card debt in 2024. Assess your income, your bills, and your commitment to decide whether this goal is possible -- or whether you're aiming too high.

2. You didn't build the necessary habits

No great thing is achieved without changing your habits in some way. If you want to pay off $20,000 in credit card debt, you need to build some habits. These could include getting better about checking your accounts to see how much you have left to pay, leaning on other payment methods to avoid increasing your credit card tab, and making credit card payments a higher priority for your personal finances. You might even need to get in the habit of working more hours or focusing on a new side hustle if you need to increase your income to meet your goal.

If instead of building these habits, you kept on as before, didn't know what your balances looked like, and made no special effort to add more money to your checking account to pay off debt, you're likely to find yourself missing the mark on your resolution. Being unable to change habits to meet a goal was the third most common reason survey respondents couldn't keep last year's financial resolution, according to The Ascent's research findings. Building new habits (and cutting old ones you hope to shed) is hard. Be kind to yourself -- and be realistic about your capacity to completely change some aspect of your life to achieve a goal.

3. Your resolution didn't actually matter to you personally

I think far, far too many of us are more concerned about how others view us, versus worrying only about our own opinion of ourselves as people. And I am definitely guilty of this, too. This mindset can also extend to your financial resolutions.

Let's say you have parents who are dying for you to stop renting and buy a house in 2024, regardless of your own financial readiness or even desire to become a homeowner. Having once bought a home in part because I had well-meaning family encouragement (and financial help), I've been in your shoes. Ultimately, going forward with that home purchase was perhaps the biggest financial mistake of my life. In your case, if you resolve to buy a house in 2024 despite not being ready or actually wanting to, failing at that resolution is a blessing in disguise.

So buying a home isn't what you want in 2024 -- totally understandable! That's my resolution, but I actually do want it this time, and my finances are ready for it. Maybe you would rather focus on increasing your income next year. That's an excellent goal, and 11% of The Ascent's survey respondents share it. Earning a higher income opens all kinds of doors.

You can make it happen by adding to your marketable skills, changing jobs or even careers, or taking on a side hustle. Don't try to please other people with your financial resolutions for 2024 -- look to please yourself and make yourself proud, because you'll be more likely to achieve your goal that way. Besides, it's your money.

The end of the year is a good time to look back and see how far you've come -- and decide how far you want to go in the new year. Keep these tips in mind to set the kind of financial resolutions you'll be excited to work on and able to achieve.