The Top 3 Financial Resolutions for 2018 -- and How to Succeed at Them

The year 2017 is winding down, so it's time to do what many of us do late in each year: Make New Year's resolutions! Researchers have found that about half of the population makes these vows -- and, sadly, that less than 10% of resolutions are successful.

Financial New Year's resolutions are extremely common. If you're vowing to be better about money in the coming year, here are some tips to help you succeed.

Image source: Getty Images.

Top New Year's resolutions

So what, exactly, are the most common resolutions? Here's a list from a year ago, via iQuanti and Google data:

Dta source: nbcnews.com. 

Interestingly, the financial resolution, while only in fifth place, nevertheless saw the biggest increase in interest. Let's take a closer look at Americans' financial goals. Here, from the folks at lendedu.com, are the three top financial resolutions that people make:

• 2%: Save more money
• 5%: Pay off debt
• 3%: Spend less money

They're all more related than you might think at first. If you can spend less, then you'll be able to save more -- and that can help you pay off debt.

Image source: Getty Images.

How to succeed at New Year's resolutions

There's a good chance that at least one or two of the above are your own goals, too, so here's a look at how you might succeed at them. First of all, there are some tips that apply to most resolutions, whether financial or not. A good rule of thumb is to set goals that fit the "S.M.A.R.T." mnemonic device, meaning that they are specific, measurable, achievable, results-focused, and time-bound. For example, just vowing to exercise more is too general. Instead, you might vow to exercise three times a week all year long, spending half an hour on weight machines at the gym or walking briskly for 45 minutes. Other recommendations include sharing your goals with others to make yourself more accountable to them and keeping track of progress in order to remain motivated. Remember, too, that if you fail at some point, you needn't give up entirely -- just get back on track and keep at it.

Depending on each resolution, there will also be specific things you can do in order to achieve them. Here's a look at how you might succeed at each of the three financial goals we've mentioned.

1. Save more money

One great way to save more is to take advantage of tax-advantaged retirement accounts. Most of us can contribute to an IRA -- up to $5,500 annually for 2017 and 2018, plus an additional $1,000 for those 50 and older. Contribution limits are much more generous with 401(k)s -- for 2017 they're $18,000 plus $6,000 for those 50 and older -- and for 2018, it's $18,500 plus $6,000. Here's how powerfully you can build a nest egg contributing generously to retirement accounts:

Data source: calculations by author.

Those sums can be yours tax-free, too, if you're socking money away in a Roth IRA and/or a Roth 401(k).

Another tactic to save more is to sock away some or many of your annual raises instead of allowing yourself to spend more. If you've been living on a $70,000 salary and you get an increase to $73,000, try to move that $3,000 into savings. 

You can also generate more income by taking on a part-time job. That won't be an appetizing idea, but consider doing it -- perhaps for just a few years. Working 10 more hours a week for a year at $12 per hour can generate $6,000 pre-tax. You might work at a local retailer or maybe you can work from home, tutoring students or teaching music or a language. You might do freelance writing, editing, or graphic design, or do some consulting.

Image source: Getty Images.

2. Pay off debt

Debt is an insidious beast. If it's allowed to grow, you'll be forking over bigger and bigger sums to lenders, often at extremely high interest rates. If you're carrying, say, $4,000 in debt and you're socked with a 25% annual interest rate, that's a whopping $1,000 in interest. Owe $9,000 at a 19% interest rate? That's $1,710 in interest annually.

It may not be easy, but you can pay off that debt. Here are several strategies:

• Negotiate: Here's a crazy suggestion -- call your credit card company and ask if it will lower your interest rates. Surprisingly, many lenders will agree to do so, to keep you around. If you've been a loyal and good customer, remind them of that -- and the fact that you can always transfer the debt to another lender with better terms. Shaving just a few percentage points off of your rate can save you thousands as you pay down your balances. 
  
  
• Tackle highest rates first: The most efficient way to pay off debts is to tackle your highest-interest rate debt first -- because it costs you the most. For example, if you owe $5,000 on a car loan charging you 6% annually, and $20,000 in credit card debt with a 16% interest rate, you would tackle the credit card debt first, as it will more effectively wipe out future interest payments and save you money in the long run. 
  
  
• Tackle smallest debts first: Another approach isn't quite as logical, but it can be more satisfying and thus might make you stick with your pay-down-debt plan longer. It focuses on shrinking the number of debts you have. List all of your outstanding debts, and rank them by size. Then, regardless of their interest rates, pay off the smallest ones first. It will feel like you're getting things done, and you'll have fewer accounts to keep track of and perhaps fewer creditors chasing you, too. In the example above, you'd pay off the $5,000 low-interest rate car loan before tackling the $20,000 high-interest rate credit card debt.

Paying off a large amount of debt can't always be completed in a single year. You'll need to maintain your focus and discipline. Remember the "S.M.A.R.T." guidelines. Set up a series of achievable goals.

Image source: Getty Images.

3. Spend less money

There are myriad ways to spend less money, many of which won't even have you feeling deprived. For example, look into whether refinancing your home loan makes sense. (One rule of thumb is that it can be worth it if the new interest rate is at least one percentage point lower than the old one.) According to a Zillow refinancing calculator, if you borrowed $200,000 in 2010, at an interest rate of 5% and you refinance into a new 30-year fixed-rate loan with an interest rate of 4%, you can save about $157 per month -- or about $1,900 annually!

Look over your spending habits and see what you might trim. If you can be sufficiently entertained via streaming services, you might drop your cable subscription, perhaps saving $50 or more a month. If you're paying $40 per month for a gym membership you rarely use, you might drop that and just take up running or exercising at home. If you're paying for a landline phone, you might be able to do just fine with only your mobile phone.

A credit card that offers cash back on your spending is effectively making those expenses cost less. Some cards will pay you 1% to 2% on everything you charge, and sometimes much more than that. Using generous cash-back cards that best match your spending habits might net you hundreds of dollars a year.

What if you sold one of your household's vehicles? If you could swing it, perhaps by car-pooling to work or taking public transportation or lots of Uber rides, you could save a lot. You might get $5,000 or even $15,000 for the vehicle you sell, plus you'll save by not spending on fuel, insurance, maintenance, and repairs for it.

Finally, play some psychological games with yourself. Perhaps challenge yourself to see how many days you can go without making any impulse purchases. When heading to the supermarket, decide in advance how much you want to spend and then don't let yourself surpass that amount. If you're at the mall or staring at a product page on Amazon.com, see if you can talk yourself out of the purchase or at least postpone it. Ask yourself a series of questions about the purchase, such as: "In a year or five years, will I see it as having been a smart buy?" "Can I find some discounts on it online or elsewhere?" "Is there a less-expensive alternative?"

With a little planning, strategizing, and discipline, you can fulfill any of the financial goals above -- and perhaps some other New Year's resolutions, as well.