Building Money Habits for the New Year
New Year, New You
It's officially the New Year, and, if you’re like me, that means it's time for New Year's resolutions. Resolutions are an intention to make a difference in your life, and they are a great first step in becoming the person you desire to be. A 2025 survey conducted by Wells Fargo revealed that 97% of young adults have already set a financially related resolution or plan to do so for 2026. This is exactly what we love to hear at the Financial Wellness Center! However, it is important to keep in mind that in another study conducted by Ohio State University, only 9% of people actually fulfill their New Year's goals, and even more shocking is that 43% of people give up on their resolutions by the end of January.
How can we expect to follow through with our New Year’s resolutions with these odds against us?
Step 1: Understanding Your Money Personality
A common issue that can make following through with goals difficult is that they require us to change too much of our identity. But before we can think about changing our identity, we must first understand ourselves. It is crucial to understand who we are to figure out who we want to be. Fortunately, there are free resources online to help us understand our money personality.
The KMSI-R is a quick quiz that you can take in less than 5 minutes, and it will tell you your different money personality types and offer tips on how you can grow or work on your relationship with money. I found this resource extremely useful when I was starting my New Year’s resolution of starting a budget because it allowed me to understand the way I viewed money, and I could use the suggestions from my data to work towards my goal.
Another free resource to help improve your understanding of your relationship with money is to set up a 1:1 confidential appointment here, at the Financial Wellness Center. We can help students work towards their financial goals and offer a broader understanding of their money habits.
Step 2: Setting S.M.A.R.T. Goals
Now that we understand our money personality, we can then have a more well-rounded approach to setting our New Year’s resolutions and be much easier on ourselves. When it comes to actually setting goals, we can implement the S.M.A.R.T. method!
We want to make sure our goal is Specific, Measurable, Achievable, Relevant, and Time-Bound. When it comes to achievability and relevance, this is where our money personality can come in handy. We want to make sure that our goal is not unrealistic to the point where we don’t even try, but realistic enough that we have the confidence to put in effort!
Examples:
- I want to save more money this year -> I am going to save $200 every month, by setting up an auto-save feature on my banking app.
- I want to be debt-free -> Every Monday at 10 A.M, I will look over my debt and make sure it is in alignment with the plan that I made with my financial counselor.
- I want to move out of my house this year -> I will actively save 25% of each paycheck, and consistently check the housing market for ideal properties that are in line with my budget.
Step 3: Integration & Habit Stacking
Now that we have our SMART goals set, we need to actually perform our tasks that align with our goals. This can be the hardest step for people to take. It can be easy to make a list of the changes we want to make and who we want to be, but doing the actual work can require a little more effort. An important tool to implement new habits is known as Habit Stacking, from the book Atomic Habits by James Clear. This is done by recognizing habits we already perform and then “stacking” our new desired habit. Here are a couple of finance-related examples we can practice for the new year:
- When I want to buy something over $100, I will wait twenty-four hours before purchasing to reduce impulsive buying.
- After I pay for groceries, I will immediately log how much I spent in my budget.
- After I clean up dinner, I will immediately check my bank app and go over my purchases I made that day.
- When I make my morning coffee, I will make a list of everything that I am planning to spend money on today.
- After I view my new paycheck, I will immediately make sure that my spending budget can align with the amount I received.
Habit stacking is a great method to integrate new habits into your lifestyle and will eventually lead you to a point where these will become part of your identity.
“No matter how you use this strategy, the secret to creating a successful habit stack is selecting the right cue to kick things off”
- James Clear in Atomic Habits
Cues will be different for everyone. I mentioned buying groceries and morning coffee, but some more examples could be when you make your bed in the morning, after you shower, when you get into bed, when you eat lunch, when you turn off the lights, etc. The most important thing is to find a habit you already perform daily to stack your new habit on top of.
Tracking Your Progress
In today’s society, perfectionism is becoming an overwhelmingly misconceived mindset that can hold you back from performing your best. You may set a goal to save $200 a month, but by March, you realize you’ve only been able to save $100 each month. While it can be easy to be ashamed of not reaching your goal, you can look back at your progress to see that you have saved $300 that you may not have ever saved in the first place.
You are going to run into obstacles when working on new habits, and the best thing you can do for yourself is to turn around and look at all the progress you have made. It is important to give yourself credit for overcoming challenges and putting effort into the new you.
