The Cost of Unfulfilled Financial Goals Each New Year

A lot of people make financial goals as part of their New Year’s Resolutions, but not everyone fulfills those goals. According to Ohio State University’s Fisher College of Business, 43% of Americans who make New Year’s resolutions quit them by the end of January, while only 9% of people actually complete them.

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There are all sorts of reasons why these goals — whether they’re officially part of your resolutions or not — fail. Sometimes, they’re too lofty or complicated. Other times, there’s simply not enough personal accountability to keep going.

Whatever the case, setting financial goals is great — and failing to fulfill them can be costly. These are some commonly unfulfilled financial goals people set each New Year and examples of what they can cost if abandoned.

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The Cost of Not Paying Off Debt

A 2023 Experian report found that the average consumer debt per capita is $104,215. This includes all sorts of debt — mortgages, credit cards, auto loans, student loans and more.

Each type of debt has its own interest rate, and so the cost of keeping it naturally varies. Take credit cards as an example.

The average credit card balance in 2023 was $6,501. The typical APR was 22.8%. Assuming a 30-day billing cycle, the average consumer incurs $122.94 in interest each month on their credit card. That’s $1,475 in interest charges each year, assuming no changes to the balance.

If your goal is to pay off your credit cards, but you consistently carry a balance each month or only pay the minimums due, you could be wasting over $1,000 on interest every year.

When you add up other debts you owe, like student loans or a mortgage, you could be losing tens of thousands of dollars each year — all because of interest.

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The Cost of Not Budgeting

Creating a budget is one thing; sticking with it is another. If you make one but stop using it, you could be spending an extra several hundred or thousand dollars a year, depending on your purchases and spending habits.

“Failure to create and adhere to a monthly budget is a major factor for people of all ages not fulfilling their financial goals,” said Curt Scott, president and investment advisor representative at Scott Financial Group.

Part of budgeting means setting financial goals with a clear “why” behind them. These goals should also include the means to achieve them.

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Say you want to save a certain amount of money each month. You’ll need a goal and you’ll need a budget. But if you don’t have a clear idea of how you’re going to do it — or where your money is going — you might not achieve it at all. And that can lead to overspending.

“[Every day], people are faced with the convenience and easy access to consumption of life. Small, frequent purchases that seem insignificant at the time will accumulate to massive, missed saving opportunities that can result in not hitting financial goals,” said Scott.

To illustrate this point, Scott provided the following examples of what everyday purchases can cost over one month vs. how much that money could have earned someone had it been invested at an 8% rate:

$5 daily coffee:

• 1-month savings: $150

• 1-year balance: $1,879

• 10-year balance: $27,624

• 20-year balance: $88,942

$12 daily fast-food order:

$35 daily online purchases:

• 1-month savings: $1,050

• 1-year balance: $13,159

• 10-year balance: $193,373

• 20-year balance: $622,594

When combining all three of these, that’s roughly $1,560 saved in a month. As for returns if invested — at the 8% rate — it’d look a little something like this:

• 1-month savings: $1,560

• 1-year balance: $19,551

• 10-year balance: $287,298

• 20-year balance: $924,977

Of course, your spending habits could be much lower or higher. Or they could include different things. This is simply to give you an idea of how much money you could be throwing away by not budgeting, saving or investing instead.

The Cost of Not Investing

Speaking of, many people plan to invest but never do. Or they wait a long time before getting started. But this can result in the loss of some serious financial gains.

“Inaction is action when it comes to investing, and beginning now … may support your goals to accumulate wealth over time,” said Jared Hubbard, Plynk App FinTech product manager and registered associate of Digital Brokerage Services.

Hubbard gave an example to illustrate how much you could be earning by taking advantage of compound growth over time.

“If you have $100 invested and it grows by 7% over a year, at the end of the year you have $107 — a growth of $7,” he said. “If next year, your $107 grows at the same rate of 7%, this time you’ll have an additional $7.49 for a total of $114.49. One more year at 7%, and it’ll grow by $8.01 up to $122.50.”

On the other hand, not investing that money means losing that growth potential.

Hubbard did point out that this is only an example, as the market changes every year. It might be higher in some years or lower in others.

The Cost of Not Diversifying

Portfolio diversification is an effective way to minimize risk and maximize returns. While the cost of not diversifying is highly subjective, there’s still generally a higher risk of losing money when you don’t do it.

“For example, somebody might be only investing in a single stock. However, investing in a variety of stocks or funds — or both — can help reduce your level of risk if a single investment does poorly — although diversification does not guarantee a profit or protect against a loss,” said Hubbard.

Say you invest $5,000 in a single stock and the company goes bankrupt. You run the risk of losing all or most of that investment. But if you’d diversified that $5,000 equally across five different stocks, you’d only lose up to $1,000. The other $4,000 could theoretically bring in regular returns and eventually make up for the loss.

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