New Year’s resolutions are notoriously hard to keep, but did you know that doing so could cost you nearly £5,000 on average?
The next time you make a New Year’s resolution, check your bank balance first. Financial New Year’s pledges, such as buying a new car or getting married, cost £4,600 on average to fulfil, according to a new study.
Consumers are just as likely to resolve to consolidate debts, go travelling or move home as make more standard resolutions, such as losing weight or give up smoking, according to the research by Freedom Finance, a UK-based personal finance broker.
A typical adult will make two such pledges at a cost of £4,612.52 each to keep, researchers found.
On average, it takes three attempts to fulfil a New Year’s resolution, according to the poll of 2,000 respondents, while two in five people admit that they have never succeeded in doing so.
Cost prevents savers from achieving goals
However, nearly half of those surveyed (46%) already believed they were unlikely to meet their goals, while four in ten feared that financial constraints would prevent them from doing so.
“We all know that motivation plays a key part in making a New Year’s resolution successful, but sometimes we overlook other important factors such as cost,” said Brian Brodie, CEO of Freedom Finance.
“The cost of resolutions for the year ahead, such as having a wedding, buying a house or travelling, can soon mount up, and can often lead to people giving up on their resolutions or delaying them until the following year.
“Planning ahead and creating a budget for your resolutions in advance can help to increase the chances of achieving your goals.”
Three-quarters of those surveyed said they were still trying to fulfil last year’s resolution this year. Among those 45% who failed to keep their 2017 pledge, 28% admitted that the cost was a factor.
Researchers also found that 11% of respondents aged under 25, plus 15% of over-55s, plan to clear their debts this year.
Increase your chance of success by making a ‘personal contract’
Resolution makers enjoy a greater success rate if they make a ‘personal contract’ with themselves to achieve their goal and engage a friend as a referee to oversee their progress, claims a US study published in the Los Angeles Times.
Research by US goal-setting website stick-K found that people who do so and adopt a financial penalty clause – such as automatically donating money to a cause they hate if they fail to achieve their goal – see a 87% success rate for financial pledges and 73% for losing weight.
The site is based on PhD work by Yale University behavioural economics professor Dean Karlan.
Savers should also consider using financial apps or other technology to support them in their goals, say investment experts, as many fail to understand how much inertia is a major obstacle to decision making.
“Automation is a way of making a decision once and having it permanently overcome that inertia,” Dan Egan, director of behavioural finance and investments at Betterment, a New York-based online investment firm which automates financial tasks for customers, told the Los Angeles Times.
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