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New Year, New You?
The New Year is upon us. I love the New Year! Almost to the point of annoyance to my spouse, friends, co-workers. It is as good a time as any to set new goals and think about what it is you aspire to change. Sure, you can do this at any time but there is a different feeling around the beginning of the New Year. It’s a time to clamp down after the chaos of the holidays and start taking some steps towards some new goals. It has become relatively common for the naysayers to come out in force and say things like “I’m gonna be the same ol’guy/gal I’ve always been” or doubt the changes that others are trying to make “You’ll only last three weeks”. Ignore these people. I can’t think of anything worse than being the same person that I was 1, 5, 10 years ago. If I looked back and didn’t see many drastic changes in my life I’d be disappointed in my progress not proud of my lack of growth. I don’t know if we’ve just become jaded over time or if people are so convinced that they can’t make changes in their lives that they are threatened by anyone trying to. Like I said, ignore these people. If you are struggling to set goals for the New Year, I’d like to share a process that I’ve come to after much trial and error and humbly submit it to you as a suggested place to start. I have lists of goals at the beginning of every year. Often, there are many goals that I never hit but I am always better off for the attempt. For example, for the past several years I have set a goal of reading 50 books a year, roughly 1 a week. I haven’t made it, I haven’t even gotten close (closest was 36 in 2017), but am I worse off for the attempt? Of course not; by setting the goal I have essentially tripled the pace I had prior to making the goal.
Here’s how I get started, on a good old fashion legal pad, I divide the list into a few different categories: Spiritual, Physical, Professional, Financial & Educational. Your categories may be different but try and consider multiple aspects of your life and use them as headings. This will help you narrow your focus a bit to one aspect of your life at a time, plus it will ensure that there is not an over concentration on one particular area. Then brainstorm different ideas for different goals that you’d like to achieve. All of these may not be feasible but at this point any idea is a good idea; just write it down. Consider this brainstorm over several days but not over a week. Go back to your list and pick one goal under each of your headings and make that your primary goal for that aspect. Then add some color around your objective. The goal must be specific, measurable, and reasonable. An example of a poorly stated goal is “I want to get out of debt” or “I want to get into shape”. A better goal is, “I’m going to pay triple the minimum balance on my credit card” or “I am going to exercise at least 3 times per week”. This way you are able to hold yourself to account on your progress. If a week goes by and you haven’t been to the gym at all, you have the following week to achieve the goal. If you only make only a minimum payment on your credit card one month you have the following month to get back on track. This is what I like to call eating the elephant one bite at a time. If you are able to focus on simple behavior changes over time their cumulative effect will get you a lot further than you initially anticipated. After you have compiled your list of goals, tell someone about them. You don’t and probably shouldn’t post it on social media for the world to see, but more importantly find someone who you trust who will encourage you and help keep you on track. That person should have an understanding of you and then the goal at hand. Preferably it would be someone who can give you a good dose of reality when you need it. For this, I turn to my wife, who is never shy about telling me when I am being unreasonable 😉 She helps me with my personal goals and I talk to John here at the office about my professional goals. Simple things like writing it down and saying it out loud are the first steps in actually getting there. Then you just have to start putting in the work.
Since we are focused primarily on personal finance for the purposes of this article, I would encourage you to each take a look at your current financial situation and take that first step. If you don’t have a budget, build one. The easiest and most productive way in my experience to do this is just by taking a typical month worth of expenses. December is usually really bad because you have a lot of one time spending but go back to November or October if you’d prefer and print out your bank and credit card statement for that month. Take a couple of different colored highlighters. Use one color for income (salary, commissions, social security, interest payments, etc.) one for “need to have” expenses (mortgage/rent, food, debt payments, utilities, insurance, etc), one for “want to have” expenses (fast food, entertainment, anything non-essential) and a fourth for savings. When you total up the amounts you will have a basic understanding of your financial situation. A couple of things to keep in mind; a good rule of thumb is to save approximately 10% of income and that housing cost should be roughly 25% of income. If you spend 50% of income on housing costs you will find it very hard to stay on top of your bills or save anything at all and this may signal that you may need to make more drastic changes in your lifestyle. When you have all of your basic numbers you can make small lifestyle changes that better reflect your values. For example, say if you go out to lunch or dinner several times a week ask yourself if those meals are a productive use of those resources or if they may be a hindrance in putting that money towards a bigger goal. If you were to cut back discretionary spending by a percentage and divert that money towards a debt payment, an educational account or a retirement account what would that mean over a long period of time? In the short run it would mean depriving yourself of the convenience of whatever item you would normally get but in the long run it can mean taking serious steps toward large financial goals. You can use this savings calculator (https://tools.finra.org/savings_calculator/) to see how even modest amounts of savings over time can help you accumulate resources and will make you a better informed consumer when deciding to spend that next discretionary dollar. I would challenge you as part of your New Year goals to look over your budget and see how your money is being spent. If you have already started on many of your long term goals I would take this opportunity for a check-up to see if you are on track for what it is that you are trying to accomplish and if your resources are appropriately allocated. If you are able to focus on what you can control and make smart decisions along the way with a longer term vision; I think it will bring a lot of peace to your life. A lot of people are stressed out about money, coming to an honest evaluation of where you are, where you would like to be, and how you plan on getting there can make you feel better about your current situation and there is no better time to take those firsts steps than right now. Happy New Year and much success to you in 2020!
*This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.*
About the Author:
Kevin W. Meyer is a Financial Advisor at John Bailey Financial.
You can learn more about Kevin here: http://www.johnbaileyfinancial.com/about-us/
and contact him at email@example.com
Securities offered through LPL Financial, Member FINRA/SIPC.
Investment advice offered through JOHN BAILEY FINANCIAL, a registered investment advisor and separate entity from LPL Financial