Financial New Year Resolutions

Happy New Year! Now that it is the start of a new year, have you come up with resolutions? 9 out of 10 people drop out of their fitness classes by February because they made a resolution which they could not continue. Perhaps they wanted to lose weight, or they wanted to go to the gym as their resolutions. However, if they were not specific about their goals, it is hard to continue.

Taking this year as a great start, why not work out your financial goals for the year, and the next 3 or 5 years. Someone mentioned that with the fast paced society, 5 years were too long.

When you make your resolution, be very specific.
For example, don’t say, “I want to make a lot of money this year.”
Say, “I want to make $8000 a month.”

Be even more specific with how you make that $8000. For example, say “I want to make $2000 from the stock market every month and another $1000 from my passive income.”
Or you could say, “I want to increase my monthly salary from $5000 to $6000 by April.”

Apart from income, you should look at savings.
Do you want to save 10% of your income or increase it to 30%? It may be a vague number, so you may want to be more specific by saying you want to save $1100 every month.

Some of the resolutions I have seen include I want to have $50000 in my bank account by the end of the year. Yes, the money is absolute, but for this to work, the target should be broken down into something more specific. Assuming this person currently has $20000 in his bank account, that means he needs to have $30000 in a year. That works out to be about $2400 a month. This means this person has to ensure that his expenses on entertainment have to be cut down, and he has to increase his savings and other sources of income to that amount. Assuming he can save $1500 a month, that means he has to think of how to get that $900. Should he get $900 from investments, or from a second job? Is this achievable? Or is it just some wild fantasy? It should be achievable.

Having said that, sometimes setting higher standards forces you to totally rethink how money should be earned. A bag that costs $2400 has to be different from a $24 bag. The marketing and promotion strategies will be totally different. The workmanship costs have to be different. The material has to be different as well. The dream the brand can conjure has to be different too. The market audience has to be different as well.

It goes the same for financial goals. Once you know what exactly your goal is, then your resolution will be more successful.

Spend 10 minutes today to work out what you want for your money. If you have time, you can work on other goals, such as health, relationship, work and habits.