Between New Year’s Eve and the end of January lies a big gulch of time that may have seen you making resolutions to take better control of your finances, only to be sideswiped by those dauntingly large Blue Monday credit card statements.
Don’t let that path of good intentions lead you to a dead-end.
While it’s become an accepted fact that most New Year’s resolutions will fail – at a rate of about 80 per cent, according to media and research firm U.S. News & World Report – your start-of-the-year goal to become a better builder and steward of your wealth shouldn’t be lumped into the same box where you store other promises you make yourself. Like maybe exercising more, quitting smoking or not procrastinating as much.
It’s not that these other goals aren’t important, it’s just that your financial wellbeing is an overarching priority that affects virtually every aspect of your life, including your health. So as you head into the rest of the year, forget about the lapses and failures of January and focus instead on how you can get back on track in 2023 and beyond.
Start by assessing the damage
How much did that family trip to Hawaii set you back? What was the total cost of all your holiday dinners, gifts and visit to the in-laws? Not to mention that new, high-end gym membership you signed up for so you can get in shape this year. If you haven’t yet added it up, take the time now to do the math and get that grand total.
Think before you make a move
You may make more than enough to cover your holiday bills in full. Or maybe you’re planning to draw on your investment portfolio so you won’t have to deviate from your monthly budget. Before you make any material financial decisions, consider the tax implications as well as the potential impact on your ability to take advantage of investment opportunities in the coming months. This is where a knowledgeable financial advisor can make a big difference.
Define your future priorities
Take the time to write down your short-, mid- and long-term priorities, and tag each one as either a want or a need. For example, will you need a new car this year to replace the one that’s on its last wheels? Are you hoping to send both kids to that boarding school in Europe with a reputation for getting its graduates into the world’s top universities? Both priorities require planning, which you can’t do if you don’t know exactly what you’re aiming for.
Get the whole family involved
It’s hard to advance a plan if the entire family isn’t on board. Sit down with your partner and kids for an honest discussion of your spending over the holidays and invite input on what you can do better in the coming year. This is a good opportunity to set some expectations on family spending this year, and to avoid any resentment and insecurity that may arise each time you tell a child that “we can’t afford that right now.”
Reset your financial plan – or start from scratch
The start of the year is always a good time to review your financial plan with your advisor. It’s especially important during these times of market volatility and economic uncertainty. If you don’t have a financial plan, start a new tradition by making a February resolution: to take time out of your busy schedule to build a holistic strategy for growing and managing your net worth, and preserving your legacy for the next generation. With a solid plan in place, there’s a higher than fighting chance you’ll stick to your new financial resolutions.
