The new year is fast approaching and for many, that means a fresh start to reset and take control of finances.
Getting back on track with your bank accounts and spending is vital for your financial health, but money resolutions often fail, according to Jade Warshaw, personal finance expert and co-host of “The Ramsey Show” and author of “What No One Tells You About Money,” coming out Jan. 6.
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While tackling debt and creating a solid plan to stop living paycheck to paycheck is crucial for long-term financial well-being, Warshaw emphasizes the importance of addressing the emotional causes of financial habits and understanding what truly drives people’s money decisions.
In an exclusive interview with GOBankingRates, the finance guru shared the top three money resolutions that don’t work — and what steps can actually lead to lasting change.
Sticking to a Budget
Making a monthly budget provides financial clarity, helps prevent debt and encourages saving, but sticking to it is one of the most commonly failed resolutions.
“Most people create a budget that looks great on paper but has nothing to do with their real life-it’s either too restrictive or too complicated, and after a couple of weeks, they feel defeated and give up,” Warshaw explained.
Instead of making a resolution, Warshaw suggests an approach that keeps it honest and straightforward.
“Start with what you already spend, not what you wish you spent and build a plan around your real habits, automate what you can, and track as you go,” she said. “Small adjustments beat big promises every time.”
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‘This Is the Year, I’m Paying Off All Debt’
Warshaw is a big believer in not having debt together with her husband. They paid off a whopping $460,000 of bills and expenses before becoming millionaires. Although she strongly advocates a zero-debt lifestyle, when people make resolutions to “pay it all off this year,” she is skeptical.
“It’s too big and too vague,” she said. “When the resolution is all-or-nothing, people end up doing nothing once life gets busy or unexpected expenses pop up.”
To make a real change, Warshaw said it’s essential to choose which debt to pay down first and “focus your energy there.” She explained that a “clear target and a clear timeline” is important because “momentum creates progress — and progress keeps you motivated.”
Stopping Overspending
Spending more than you earn is a common way to rack up debt and when Warshaw hears people say they’re going to stop overspending, she knows the resolution will often fall short because it’s a hope, not a plan.
“Most overspending isn’t about math; it’s about emotion, stress and the stories we tell ourselves when we’re tired or overwhelmed,” she explained.
To resolve the problem and improve your money management, Warshaw said you have to “identify your triggers,” which are different for everyone.
“For some people, it’s boredom, for others it’s stress, or the feeling that they ‘deserve it,’ she explained.
Once the issue is targeted, you can break the cycle.
“Give your money a job before the month begins and check in weekly so you’re choosing your spending and not reacting to it,” she said.
Quitting unhealthy patterns and getting to the root of the real problem behind money issues isn’t easy, but with intentional behavioral changes, you can break free of harmful financial habits.
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This article originally appeared on GOBankingRates.com: The Most Failed Money Resolutions — and How Experts Say To Make Real Behavior Change
