Check out Liam's advice for keeping your financial resolutions for 2019
January is a time when many of us hit that reset button and promise ourselves that this year is going to be different and we are going to get our finances under control and be more proactive than last year.
All very well, but New Year’s resolutions are easy to make but hard to keep, so before you start putting that list together, there are things you need to consider - some housekeeping rules if you like.
1. Make your goals very specific
Don’t say you want to save more this year than last. It’s too broad and you have nothing to measure your progress against. Put a specific number on how much you are going to save every month into a dedicated savings account.
The same goes for your spending. Identify an area you may have overspent on last year, and pledge to spend, for example, €50 less each month. You have to hold yourself accountable and setting yourself targets will help.
2. Be careful with your timeline
Resolutions only work when they are realistic. Making changes to how you interact with money will take time, and the bigger the goal you set yourself, the longer it may take to achieve.
Don’t think you are going to wipe out your debt or have a huge bank balance in a short period of time because if you don’t, you’ll just give up and think you have failed or done something wrong. So, think this through and figure out how much you can save or how much extra you can use to pay down debt on a consistent basis.
Once you know that amount, you’ll be able to figure out how long it will take you.
Consistently saving €100 per month over the long term is better than starting off saving €500, giving up after two months and then saving €0. So, start off low and aim high.
3. Don’t try to do too much, too quickly
Yes, you might be super motivated to make changes, but sometimes your enthusiasm becomes too much and the sacrifices you are making to free up extra cash each month, come at a cost to your health and wellbeing.
You need to strike a balance of good quality of life and improving your finances. Oversaving can be as bad as overspending particularly when it affects other parts of your non-financial life. So, don’t deprive yourself too much because it will just backfire on you.
After a while you will give up, and saver’s fatigue will kick in, and you’ll end up spending more than you ever did, so you need to give yourself time to adjust to the changes you are making. Once they are manageable and doable, you will see improvements over time.
4. Attach a meaning to your goal
Sometimes people lose weight because they want a better-looking body when they hit the beach during their summer. They have a reason why they eat less and exercise more.
The same principle should apply to your finances. If you have a reason why you are bringing your lunch to work once a week, or spending less on coffees or whatever it is, it makes the sacrifices easier, because there is a reason behind why you are doing this.
You may want to build up enough money to tell your boss to get lost, you may want to go on a great holiday, buy a property, get out of debt once and for all or start your own business. Whatever the reason, once you attach a meaning to it, the effort and hard work becomes more tolerable, and you are less likely to give up, if you have a strong enough reason why you are doing it.
5. Don’t forget
Sometimes we set ourselves a particular goal but, after a month or two, we never check back to see whether we are on track or not.
This can be very deliberate because there’s no point – we never opened the new account, we never set up a monthly budget, we never cut back on our spending. However, if you have followed through and taken the action you said you would, you still need to check back on your progress because it’s a great motivator to review what advancements you have made. So, maybe set yourself intervals of two, three or six months to check back and see how you are doing.
6. Have just one goal
One of the reasons many New Year resolutions fail is because we set too many. We write a list of five or six goals we’d like to achieve but it’s just too many and trying, to get, to all of them can be overwhelming.
So, instead of having a long list of things you’d like to change, maybe just have one. And if you concentrate all your efforts on it, and make the changes required, your chances of success and sticking with it will greatly improve.
Liam Croke is MD of Harmonics Financial Ltd,
based in Plassey. He can be contacted at email@example.com or www.harmonics.ie