Here we are, early in a new year and we’d wager it’s a safe assumption that you’ve read enough about resolutions by now. For what it’s worth, we have too, but we’re also suckers for a good NIH study and this 2020 article about the differing success rates of approach-based resolutions, versus ones that are avoidance-based felt too relevant to pass up.

To summarize the study, after one year, the rate of successful completion or ongoing maintenance of a resolution was 11.8% higher among the population who set approach-based resolutions, compared to those whose resolutions were avoidance-based. The full article is linked above, but we wanted to comment on this research specifically in the context of goals related to your money.

So, let’s say you need to save $100,000 per year to fund a goal at some point in the future. An avoidance-based approach is a lot like cutting sweets out of your diet, by actively removing something specific and presumably enjoyable from your life. As this approach would apply to your money, it’s akin to completely eliminating spending on things like restaurants or vacations. While the outcome of this disciplined saving may yield pleasure at a future date, its near-term impact on your emotions is unpleasant at best and, which the study suggests, is the root cause of imperiled outcomes.

On the other hand, an approach-based method of saving $100,000 per year would be more about the ‘Why’ than the actual amount. With this method, the ‘How’ of saving $100,000 per year is secondary to reasons you ever set this goal in the first place. For example, statistically, you need to save $100,000 per year, so you’re able to either scale back or stop working completely, long before your mid-to-late 60’s. Yes, the goal is early retirement, but the why is the reason. Maybe early retirement affords you the freedom to travel, explore new hobbies, live abroad, or the security and control of knowing you can maintain your quality of life, independent of gainful employment.

The research suggests that using an approached-based method to resolutions builds in a degree of agency, allowing the resolver to change how they accomplish their goal, without so quickly feeling it’s become unattainable. In the absence of an avoidance-based approach as well, the resolver can leverage this flexibility to proactively change their actions at any point during the time-period, as their circumstances and ‘Why’s’ almost-invariably evolve in step.

However, it does not appear approach-based and avoidance-based resolutions need to be mutually exclusive. Rather, as we often observe with clients on a long-term savings timeline, avoidance-based methods are employed naturally throughout an approach-based, goal funding plan. The difference is that if one avoidance-based method fails or simply becomes untenable overtime, an approach-based method allows for the client to pivot organically, without putting their long-term success in jeopardy.

We can always help with the how, but the why is it up you.