The Easiest Resolution You Will Ever Keep

Around this time of year you doubtlessly will find dozens of articles on line proposing resolutions for the New Year — how to lose weight, be active, read more, save money, be a better person and so on.

We all would like to be five pounds lighter and $1,000 richer, of course. But resolutions are easy. It’s keeping them that’s hard.

So here’s a New Year’s resolution you can make that’s easy to keep. As it happens, just by doing this one thing you will end up saving a lot more money and, in time, retiring on it.

It really is one move, one time, never look back. No need to renew your commitment in 12 months. No need to feel guilty when discipline falls off in a few months.

When you get back to work, increase your 401(k) contribution. If you don’t have a 401(k), set up an automatic transfer to your personal IRA.

Make it an easy, achievable number. How much do you spend on streaming media in your home each month? Maybe $15? Okay, how about eating out once a week. There’s probably another $85.

Okay, so you now have at least $100 a month in disposable income to save instead. Go ahead and bump up your contribution by that much at least.

You won’t notice the difference in your paycheck. If you’re paid twice a month, it’s $50 each period. Forgettable money, and you will forget about it.

Yet that money will be growing for you. We’re talking about $1,200 a year in your retirement plan that wasn’t there before.

Over two decades growing at 8% that money turns into $59,308 for your retirement. That’s assuming you are starting from zero savings.

If your employer offers the option, go ahead and tell them to increase your contribution each time you get a raise. Or just add 1% more from your pay on the spot. If you make $50,000 a year, that’s $500.

Taking away temptation

You will not notice a $500 difference divided into 24 paychecks. But your retirement account will notice. Rather than $59,000 it will be at $84,000 by the end of two decades.

However you choose to tackle it, the trick is automation. Make it a standing resolution to increase every year by 1%. The snowball effect will be tremendous, enough to easily finance a successful retirement.

Most importantly, automation takes the decision away from your weaker, reward-focused self. Yes, you could just spend the money, but you know you shouldn’t.

Having it removed from your pay beforehand takes away the temptation. You learn to live on what’s left in the pay amount. No need to make resolutions anew, no need to feel guilty about lapses, since there won’t be any.

How you lose those five pounds for good is another issue entirely. Investing in some decent running shoes and do your best. The saving money part, that’s easy.