Happy new year! If you have not finished your New Year’s Resolutions, today’s topic may help.
Saving more and spending less are consistently in the top 10 most common resolutions. Unfortunately, changing financial habits is also a most common resolution to break.
I want to make a bold statement: In the United States, our financial literacy programs are working well. However, there is a difference between education (literacy) and implementation (planning and practice). AI helps us see the difference. One evening, I asked a chat bot, “How can I stick to a budget?” The result was a full page of text which closely resembled a personal finance presentation I developed. For a moment, I thought AI might put me out of work.
However, AI only provided more financial literacy. The knowledge to create a working budget and meaningful goals is right at our fingertips. So, why are we still not successful? I believe the answer lies in two points. One we will cover today, and the second next month.
Just writing a budget does not produce change. We need to know where the problem is and then focus effort on that problem. Resolutions fail because we do not know where to focus effort. Uncovering the problem starts by gathering information about current spending habits.
For 2026 New Year’s resolutions, a few ideas may help:
- Using two or three recent bank and credit card statements, categorize all of your income and spending … and be honest. Average the monthly totals and organize the categories onto a document. This is your current budget.
- Choose just one category to consciously improve.
- In addition, begin depositing $20 into a savings account each month (or add $20 to current savings deposits). Choose a retirement account, savings account, or other savings tool to fit your goal. It’s not much, however, adding to a habit is easier than starting from scratch.
- Plan a meaningful but inexpensive reward to enjoy in six months. Divide the cost by 6 and save that amount each month.
- After six months, enjoy the reward, and then repeat steps 1 through 4.