There really is nothing like the end of the holidays and the start of a New Year to give us that financial wake-up call we probably all need after weeks of shopping and spending money before and after Christmas.
Whenever I meet people after Christmas, they point out how much they have saved on their purchases because they bought them on sale. The problem is they didn’t save anything, and that is the downside to sales because they convince you to buy something that you really never needed – as Yves St. Laurent once famously said “Marketing is giving people things they never knew they wanted.”
But having said that, it is great to see so many people in the city centre and in our shopping centres over the holiday period spending money.
There really is a feeling this year that people are spending more and are more confident about their future and that is so welcome given what we have gone through the last five years.
Anyway, because so much has changed since late 2008, you ought to know well by now that there is no more fingers crossed hoping things will work out for you, or that the likes of your bank or the financial regulators in Dublin will be looking out for you.
I would urge you to make 2014 the year where you take personal responsibility for building, securing and maintaining you and your family’s financial security.
The rules have changed so you need a new game plan and I will help you in the year ahead and make sure your new found resolve and determination becomes a reality. Your starting point is to let go of the past.
What I mean by this statement is that you have to forget about what your house was once worth or what your pension fund was once valued, or how your job used to be secure etc.
I hear people say these things all of the time, and they really are just excuses because they don’t want to face reality about their current situation.
If you are determined and want to improve your financial situation in 2014, then you need to focus on what you can change yourself. The only way you can achieve this is by action.
If you don’t and, for example, another year of not saving goes by, or you still haven’t committed to paying off your credit card debt etc and then something happens you will regret not having decided to do something about it 12 months previously.
By then its too late to do anything about it, so please don’t let that happen to you this year, so act now.
I know a lot of people find financial matters confusing and complicated and try to educate themselves at the start of each year by reading financial books that cover everything about money.
Ironically this only makes things worse, because it just becomes information overload and a bit overwhelming and they don’t know where to even begin.
But let me tell you, that by just starting and taking things one step at a time is more important than trying to become an expert in something that you find complicated or uninteresting.
Don’t worry about being perfect, I would rather act and do something and get it right say 60% the first time I do it than doing nothing at all. Think about it, 60% of the way is much better than 0%.
So, let’s get started on those small steps, and I want you to think of three things you want to improve or achieve with your finances in 2014.
Write them down, don’t over analyse them just write them down. How you will achieve them is not important at the moment, writing them down is. Set yourself a short term goal – something you will complete in the next 12 months, a medium term goal – completed in the next three to five years and a long term goal – completed in ten years plus.
The reason I want you to do this is because the only way to improve your financial situation this year is by setting yourself goals and people who do this exercise and detail and write down and commit to what they want to achieve – say, retire at 60, get out of all non-mortgage debt in five years, pay their bills on time, or whatever it is, are actually much more likely to make their goals become a reality than those who don’t.
Why? Because if you don’t know what it is you want to get, then you have no idea what you need to be doing.
Now that you have written the three goals you want to achieve - and when I say achieve, it doesn’t mean that you have to complete a particular task in the next 12 months, it means that those medium and long term goals you set yourself are things you start in 2014 that will eventually lead to the accomplishment of that goal.
For example a goal of yours could be to start overpaying on your mortgage this year and if you did this then you will take say five years off the term of your mortgage – your mortgage may not finish for 20 years but you achieved your goal in 2014 by setting up the standing order for that overpayment.
Another goal might be saving money for your child’s future education, something you haven’t started yet, but your child is 13 and is five years away from going to college. But you achieved your goal in 2014 by setting up a new savings account where you put away, say, €100 each month into it that will eventually be used towards their fees etc.
Remember all goals are achieved by first writing them down, prioritising them and then looking at what resources you have available that can be applied to each goal and next week I am going to show you just how you can free up money each month that can be applied to each of them without having to come up with any “new money”.