But maintaining motivation is easier said than done, and the fervor you once had for stockpiling your savings has probably waned more than you'd like by now.
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Get started with a free financial assessment.
In fact, researchers at the University of Scranton have found that only between 40% and 46% of people who make New Year’s resolutions successfully keep them by the six-month mark.
If you're in the majority that feels like giving up until New Year’s rolls around again, don’t wave the white flag just yet.
When it comes to your money, it’s never too late to keep making progress—even when life gets in the way.
To prove that point we rounded up three people who'd set financial resolutions for themselves in 2015—only to have them waylaid by unexpected expenses, job loss and family obligations.
Then we asked Matt Shapiro, a Certified Financial Planner™ (CFP®) with LearnVest Planning Services, for his advice on getting their financial goals back on track—and maintaining momentum for the rest of the year.
The resolution: Pay off student loan and credit card debt
Who: Amy Wofford, 26, marketing professional, Denver
How Amy Got Off Track: “In January I set two goals to complete by December: Pay off my $3,200 student loan and reduce $750 of credit card debt.
Things kicked off great. I did some calculations and figured I could set aside $460 per month to cover these goals, as well as my tax bill (I was a contractor for most of last year).
So $200 went to the loan—a little more than my $159 minimum payment—and $100 to the credit card debt. The remaining $160 was automatically transferred to savings to cover taxes. I planned to pay off the remainder of my student loan with whatever savings I had left at the end of the year.
I also started putting $50 a month into a separate emergency fund—money I don’t intend to touch.
But some major setbacks have slowed down my progress. First, I thought I'd made the proper quarterly estimated tax payments, but I ended up owing $900 more than I thought in April. I didn't have enough in my tax fund, so I had to use a good chunk of the money earmarked for paying down my debts in order to cover that bill.
Second, just this month, the start-up I've been working for shuttered. With my steady income gone, accomplishing my goals will be even more difficult for the rest of this year.
I have some freelance graphic design and marketing jobs lined up that will hopefully tide me over until my next full-time job, but I think that I have to revise my goals.”
“Credit cards are typically going to carry a higher interest rate. Frankly, I would pay the minimum on the student loans until the credit card is paid off.”
What the CFP® Thinks: “The fact that Amy's employer went out of business isn’t her fault, but it certainly throws a wrench in her plans,” Shapiro says.
Most immediately, Amy should consider setting aside 30% of her freelancer pay for taxes—or work with an accountant to get a better estimate of what she might owe—so she doesn’t get caught with a surprise tax bill next year, Shapiro says.
Depending on her freelancer's income, she may have to pare back what she’s been putting toward her resolutions. But once she finds full-time employment, Shapiro suggests that Amy put more of her funds toward her credit card debt.
“Credit cards are typically going to carry a higher interest rate,” he explains. “Frankly, I would pay the minimum on the student loans until the credit card is paid off.”
Shapiro also suggests continuing to put $50 into her emergency fund—especially given her inconsistent income.
“In her case, I’d want her to have a bigger emergency fund—[saving] at least one month's worth of take-home pay before she accelerates her debt payments and other financial goals,” he says.
What Amy Thinks: “It's definitely helpful to hear that 30% guideline for setting aside tax money, and to know that I should focus on credit card debt in the short term. I will practice this advice starting today!
Until I know more about my job timeline, I’ll pay the minimum on my student loan—but pay more than the minimum on my credit card debt.
And I'll continue making my emergency fund contribution using my severance money until I find my next job—which I am optimistic will happen sooner rather than later!”
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The resolution: Save for a dream vacation
Who: Mark Savoree, real-estate developer, 55, Paris, Ill.
How Mark Got Off Track: “My wife, Karen, and I have always been good about saving.
But we’ve skipped vacations the last few years because we wanted to put our three kids through college without them having to take on debt—which took up every extra cent.
We paid the last tuition bill for our youngest child in September. With college costs finally behind us, we resolved to put $1,500 a month toward taking a dream trip to Hawaii by the end of the year.
On January 1, I made the first deposit into a savings account earmarked for the trip. Soon after, my son moved just outside Los Angeles to accept his first job in the automotive industry—but the apartments that fit his budget weren’t in safe neighborhoods.
He finally found a place in a nice area near work for $1,800 a month—about the same as what a duplex, with a garage, costs where I live!
To help him out, we transfer $850 into his account every month. We’re hoping to just do this through the end of the year—until he finds a place he can manage on his own. So Hawaii for the holidays will have to wait.”
"I see this a lot with parents whose kids move to cities like Los Angeles or New York. It’s great that they’re able to help their children—but there’s a very visible trade-off.”
What the CFP® Thinks: “I see this a lot with parents whose kids move to cities like Los Angeles or New York,” Shapiro says. “It’s great that they’re able to help their children—but there’s a very visible trade-off.”
On the bright side, notes Shapiro, they still have $650 leftover to put into their travel account, which will reach a decent $7,800 by year’s end.
“If they really need a vacation by December, they can consider going someplace cheaper, like Cancun,” Shapiro says. But if they have their hearts set on Hawaii, they can set a goal to go in two years, he adds.
For Shapiro, the bigger issue will be deciding how long they’re willing to put off their own dreams to help fund those of their kids.
Shapiro usually encourages clients to wean children off the parental payroll sooner than later—even if “that means having a difficult conversation about getting a new job that pays the bills, or setting a time limit for how long [financial support] can go on."
Side gigs could also be a solution.
Shapiro recalls his own experience working on the set of a music video for two weeks, while juggling his day job, in order to make a few hundred bucks extra. “There are plenty of these kinds of jobs, especially in a city like L.A.,” he says.
What Mark Thinks: “My son is still on my monthly checklist, but our deal was that I would help subsidize his rent for just the first year.
He has a great starter job, but it requires travel and burning the midnight oil, and it would be difficult for him to pick up something on the side.
So Karen and I have decided to stay the course and keep saving for the Hawaiian dream vacation, even if it takes a little longer. We have been putting between $600 and $625 away each month into that vacation fund.
I actually think this will make the trip even more worth it. If it’s worth having, it’s worth waiting for!”
The resolution: Build an emergency fund
Who: Maureen Carlomagno, 35, health, wellness and lifestyle coach, Charlotte, N.C.
How Maureen Got Off Track: “My husband, Sam, and I have gotten into this pattern of resolving to save two months of living expenses, actually saving the money—and then depleting the fund because of unforeseen expenses.
He’s a web developer, and I have a coaching practice, and our combined income is in the high five figures. We save at least $300 of our pay every month for emergencies—but it probably could be more if we pared back in other areas.
Toward the end of 2014, we set a goal to have $5,000 in emergency savings, and had somewhere between $3,000 and $4,000 in January—in part by forgoing vacations last year.
Then an opportunity to travel came up that we couldn’t refuse, as well as some unexpected bills. Now we’re down to $1,500.
Every time we get close to our goal, something derails us—which makes me think we don’t have a good structure to our plan. What really throws us off are irregular expenses, like the car insurance we pay twice a year.
We need advice on how to create an emergency fund—but not dip into it!
“A good deal on travel is not an emergency—a blown car transmission is.”
What the CFP® Thinks: The biggest reason for Maureen's incredibly shrinking emergency savings?
Much of the money isn't actually being used to cover emergencies, says Shapiro.
The first category of expenses that seems to be draining their rainy day fun: nonmonthly payments, like car insurance premiums and property taxes, that you typically pay annually or quarterly.
To prevent having to dip into your emergency savings to cover them, Shapiro suggests opening a separate account for nonmonthly payments. Then tally up the total amount you expect to pay for these types of costs over a year, and divide by 12—that’s the number you should aim to save each month, so you don’t get caught off guard later in the year.
“For example, if [Maureen] pays a $450 car insurance premium every six months, that's $900 a year,” Shapiro says. “Divided by 12, that means she’d have to set aside $75 per month.”
The second category of costs sapping her emergency savings is nonessential, discretionary expenses.
“A good deal on travel is not an emergency—a blown car transmission is,” Shapiro says. “If travel is something they intend to do on a regular basis, it may make sense to include that as a nonmonthly expense in their budget.”
And saving for irregular costs in separate accounts means she won’t need to dip into her emergency savings—at least until a true emergency comes along.
What Maureen Thinks: “I think saving for nonmonthly expenses will be something we can start on right away. It shouldn't be hard to set aside money for those costs every month.
As far as other nonessential expenses, like travel, goes, I think my husband and I will have to take a step back and look at our spending more closely.
We need to think about what we really want to put our discretionary dollars toward in greater detail."
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.