WASHINGTON — You mean well. You tell yourself every new year that you'll do better with your money.
But by spring, you're no better off. You haven't made progress with any of your financial resolutions. Then you get discouraged. Off to the mall you go to soothe your soul with a sale.
Fidelity Investments looked at what people say are their top financial resolutions for 2019. They want to, in this order: save more money, pay down debt and spend less.
Here's the problem. You can't achieve your financial goals with vague promises. You need to be specific, and you have to have an actionable plan with a timeline.
In my experience working with individuals trying to clean up a financial mess years in the making, you'll likely fail at your resolutions if you just say:
• "I'm going to save more money."
• "I want to get rid of debt."
• "I'll spend less this year."
Instead, rework the top three most popular financial resolutions using the SMART criteria. The acronym stands for: specific, measurable, attainable, relevant and time-bound. So, here's how you might reword your resolutions using SMART.
• Before: I want to save more. SMART: I will save 5 percent of my after-tax income until I have at least $1,500 stashed in an emergency fund.
You've probably heard that you need to have at least three to six months of living expenses saved. But that might be too high of a hurdle to jump in just one year. If your rent/mortgage, cable, cellphone, car payment, utilities and other household expenses come to $4,000 a month, the three-month goal would require you to save $12,000. That's daunting.
A more attainable goal is to start by saving just enough money to cover a financial emergency of, say, $1,500. If you easily get there, then try to reach for a higher goal of saving one month's worth of living expenses.
• Before: I want to pay down debt. SMART: I'm going to use the "debt dash" method to begin digging myself out of debt.
With the debt-dash strategy, you order outstanding debts starting with the one with the lowest balance. You'll have to cut your expenses or earn extra money — or both — to find the funds to attack the debt. Commit to a consistent amount. Make the minimum payments on all other debts on your list.
Once you've paid off the first debt, move to the next one. Be sure that your extra payments are applied to the principal and are not counted as extra monthly payments.
You could also list your debts starting with higher-interest debt first. Mathematically this makes sense. However, I've found the debt dash works better because people can see progress sooner. And a 2016 study published in the Journal of Consumer Research found that borrowers are more motivated when they concentrate first on the debt with the smallest balance.
Depending on the payoff strategy you use, calculate how long it will take to be debt-free. It might take you five years, but at least you have a timeline. You can find a debt reduction calculator at vertex42.com. Under "Browse Template Categories," click "debt payoff."
• Before: I will spend less in 2019. SMART: I'm going to use a spending journal to identify expenses I need to cut out.
Get a small notebook and, for 30 days, write down all the money you spend. Every penny. Each time you pay for something — even that pack of gum or bag of chips — write it down.
Include any bills you pay (mortgage, credit card, car loan). And during the process, don't you dare judge yourself.
After the 30 days, review your log. Add up the discretionary expenses such as eating out. Make a note of where and when you tend to get off track concerning budgeted expenses. Maybe you need to get up earlier for work to pack your lunch.
Use the information from your spending journal to make cuts to your budget. And not every splurge needs to go. If your Starbucks blonde roast helps you start your day in a better mood, then get that coffee. But other expenses have to be eliminated. You can't do it all.
Armed with a detailed look at your spending habits, you can make adjustments to your monthly budget and find the money to save that $1,500 or pay down your debt.
Be SMART about your financial resolutions for 2019, and failure won't be an option.
Michelle Singletary writes a personal finance column for The Washington Post. Her email address is email@example.com.