How to make your New Year’s Resolution stick
A poll from Statista shows that over half of US adults are making a resolution for 2025. One in five respondents are resolving to “save more money” in 2025. Will they be successful? It depends on the systems they create.
Atomic Habits
In the book Atomic Habits, author James Clear helps people implement life changes by starting small – at the atomic level. The book became massively popular, which speaks to the effectiveness of Clear’s message and method.
The principles of Atomic Habits
How many of us have said “I want to save more money” but never changed a thing? Most likely, we didn’t know where to start. Atomic Habits encourages you not to focus on your goals; rather, you should focus on your systems. When you play a basketball game, do you spend 40 minutes looking at the scoreboard? Of course not. You focus on your offensive and defensive game plan. If you do this, in the words of football coach Bill Walsh, “the score takes care of itself”.
The other core principle is that of tiny – atomic - incremental changes. These tiny changes are easier to implement because they are less noticeable and less painful. Yet, they still work! There is a neat chart in the book that shows if you get 1% better every single day, after a year you will be 37 times better than when you started.
What makes a good system?
How would we apply this to the goal of “save more money”? In the words of Clear, you should “make it easy”. You should create a system that works automatically, without you having to manually move money into a savings account. You should also create a plan that is as painless as possible by making frequent small changes rather than one large change. A sudden decrease in your spendable money may cause a lot of friction, making it less likely that the habit will stick.
With that said, here are a few different ways you could implement a plan to save more money:
Increase your 401(k) contributions
Since your 401(k) contribution is deducted from your paycheck, it satisfies both of the principles of a good habit system. This is an easy way to increase your savings with very little friction.
This can be done either through an online portal or with a form provided by your HR department. I would try to increase by the smallest amount possible to reduce the friction of your savings increase. Some plans also have a feature to automatically increase your contribution at regular intervals – for instance, at the same time as your annual raise.
Set up an automatic transfer on payday
Most banks allow you to create recurring transfer plans. Create a plan that coincides with your pay day (e.g. every other Friday) that will zip money into your savings account as soon as it hits your checking account. This way, there is no risk that you will spend the money.
Set up direct deposit with your employer
Instruct your employer to deposit the first $100 of each paycheck into your savings account, and the rest in your checking account. This is more work than setting up a transfer plan, but the benefit is that you will never see the money in your main checking account. After doing this for a year or two, you may be surprised at how much you squirreled away in your savings account.
You can imagine how this system can be applied to other areas. For example, I have used this system to create a habit of riding our stationary bike.
If you are interested in learning more about the Atomic Habits system, I would encourage you to read the book.
If you would like help creating and implementing your 2025 savings plan, please use the link below to schedule a 30-minute phone call with our team.
About the Author
Joseph Fowler, CFP® is a financial planner and co-owner of 402 Financial in Lincoln, NE.
402 Financial provides financial planning and investment management services to people approaching or in retirement. Joe always acts as a fiduciary and never takes commissions on product sales.
Click this link to schedule a free consultation with Joe.
