Did you hastily make some New Year’s personal finance resolutions this past December 31st, determined that this will be the year that you “get it done” (to paraphrase Larry the Cable Guy)? Are you confident that you have chosen something that you can achieve, or do you want to do? If the answer is yes. I wish you luck and hope you have the “self-control” to keep to the resolution. I have rarely (if ever) been able to stick with my “promises to myself” in the New Year.
Personal Finance Resolutions
Not sure what the New Year does to folks. I think it might have to do with the fact that they mortgaged their homes to pay for Christmas. Still, New Year Financial Resolutions seem to be particularly difficult to live up to. It is especially hard if you have already put yourself in the hole with Christmas.
Some examples of personal finance resolutions might be the following:
- I resolve to not spend as much next Christmas: this one sounds great and wonderful, however, how can you decide if you have succeeded? First, you need to figure out how much you spent on the past Christmas, which is not as easy as you might think, but it’s not impossible (especially if you kept your receipts). Then you need to figure out how much you still owe, and figure out how you are paying that off (say pay off all of it by April?). Then you need to make a plan on how to save enough money to pay for your cheaper Christmas this coming year and how you might do it. This is a very complicated resolution, maybe you should resolve to Pay off Christmas by March?
- I resolve to pay down my Credit Cards: Wow, this one is a really good one at face value, but then again, maybe a STRETCH resolution for many. The folks that have Credit Card debt, usually don’t live the correct lifestyle to be able to pay down this debt (sort of a cyclical problem), so maybe you should change the resolution to: I resolve to get no further into Credit Card Debt?
- I resolve to save more this year: Again, a noble resolution financially, however, can you afford to save? Are you carrying a staggering debt load, in which case, why are you saving, you should be paying off debt! Maybe a better version of this would be, I resolve to increase my Net Value, and you can then either lower your debt or increase your savings.
- I resolve to spend less this year: an excellent resolution but a little vague and kind of hard to measure of succeed with. Maybe be more specific in your goal and you might be a little more successful? I resolve to buy 1 less coffee a day is a great one, I resolve to pay less for my banking, is another very good one,I resolve to not shred $20 bills or light my cigars with them might be the best one (if you are doing that).
- I resolve to get my financial life back in shape: wow, that is a huge one, again, maybe look at this and break it down to something simpler like, I resolve to make or update my Will is a very good thing, I resolve to cancel 2 credit cards is an interesting one as well. You may as well be resolving to solve World Hunger on this one, way too general and way too hard!
- I resolve to read more financial blogs and especially Canadian Personal Finance Blog: that is an excellent resolution, which I hope you all add to your list.
Remember the great movie “What About Bob” and the Dr. Leo Marvin method of “Baby Steps,” make your resolutions achievable, and you will succeed. If you are burning or mutilating money, please remember that it is also against the law.
I take the amount I’ve allocated to Christmas out in cash and only spend that amount on gifts. That way I know I’ll never go over my budget and I won’t forget anything that I charged when January rolls around.
If I have money left over from my mom’s gift my brother or dad might get it. It makes for better gift giving — guilt free.
“you need to figure out how much you spent on the past Christmas, which is not as easy as you might think”
This is hard? I have a “christmas” category in Quicken. I hit the report button, and I find out. How much I still owe is irrelevant, since the cost hits my accrual-based accounting system as soon as the purchase is made (and I do not pay interest on credit cards).
Maybe a better record keeping system should be amongst your resolutions. I am very heavily of the opinion that you cannot get control of your finances if you do not know where you spend money. Information is a key component of informed decision making.
According to this article:
the brain has a limit to the amount of willpower it can muster. It seems that we’d be better to pick one resolution and work hard on it than to pick several and fail at them all.