Sunday, December 16, 2012

Determining Financial New Year’s Resolutions

Overall, I’m not a big fan of New Year’s resolutions. I tend to believe that goals should be set when and where needed through the course of the year, not just at the start of a new year. However, this doesn’t mean that I’m against them completely, and can’t see the positive aspects behind such resolutions, especially when it comes to our personal finances.

Over the years, and throughout resolution successes and failures, I’ve developed certain rules that help me to develop and achieve my financial New Year’s resolutions when I do set them.

Start Early and with Variety
I find that it’s a good idea to start forming my resolutions in December and sometimes even earlier than that. Waiting until the last minute can leave me scrambling to come up with financial resolutions that might not be the most effective or pertinent to my financial lifestyle or needs.

But just starting early isn’t where I leave my New Year’s resolution preparation. Instead, I consider multiple resolutions that are both short and long-term in nature. Meeting a few resolutions shortly into the new year can provide the motivation to maintain interest, keep pushing to meet my longer-term resolutions throughout the rest of the year, and maybe even set more goals.

Make Resolutions Lofty, Yet Realistic
While I might use certain short-term, simpler-to-meet type resolutions to push myself to attain various goals during the year, I don’t make the majority of my resolutions too easy to achieve. Instead, I like to set certain lofty, yet realistic resolutions to push myself.

What’s the point of setting goals, if they don’t push me to achieve?

Therefore, I utilize a combination of easily met goals, paired with loftier financial expectations to drive me in meeting a tiered goal structure. For example, cutting expenses a little each month helps drive me toward an overall 10 percent expense reduction goal year-over-year, or increasing productivity by an extra 5 percent each week can help me achieve a goal of producing an overall increase in profits for the year of 20 percent.

Make Resolutions that are Pertinent to My Financial Life
I find that it’s important to make New Year resolutions that somehow affect my regular financial life, or if nothing else, build up toward larger resolutions. Just saying that I want to quit a job and start an independent career as a self-employed individual without doing things like investigating my career interests or forming a business plan could leave me with a resolution that’s difficult to attain on its own.

I had leaving my job as a New Year resolution once, but there were plenty of mini-resolutions that accompanied that goal. Yet, by meeting those goals, which included building a business plan, testing out my chosen profession before leaving my job, having an exit strategy, and similar items, I was able to achieve my larger, all-encompassing resolution.

Writing Resolutions Down in an Easily Visible Location
I’ve often seen this sort of rule on other New Year’s resolution related articles, but I feel it’s a good one by which to abide. Writing my resolutions down and keeping them out where they are visible and seen on a regular basis can be important to keeping them fresh in my mind.

This location doesn’t necessarily have to be on a calendar, the refrigerator, or even a sheet of paper. I tend to put my goals on my income/expense tracking spreadsheet -- something I view on a daily basis -- to help me stay on top of my financial resolutions and hopefully ensure steady progress. Just bear in mind that if these are financial goals that are not items you’d like to share with the general public, you might want to reconsider placing them in a visible place at work or some other spot where they might be seen by others.

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