Happy New Year!

Time for New Year’s Resolutions?

It’s that time when you see references to New Year’s Resolutions all over the internet.  People ask each other what their New Year’s resolutions are.  Parents tell their children that they need to think of a New Year’s resolution.  Gyms and weight-loss clinics have an influx of new clients.

I’m not a big fan of New Year’s resolutions.  My feeling is that very few ideas for self-betterment conveniently strike you during the last week of the year.  Waiting to the specific date of January 1 seems arbitrary when you’re talking about making or breaking a habit to enhance your life.  If you truly believe this habit will improve your life, why wait until January 1?  And feeling pressured to come up with a resolution simply due to a calendar deadline seems to me to be a setting yourself up for failure. How committed can you be to an idea you hatched just because of a number on the calendar?

Measure your progress

But – when it comes to financial resolutions, I concede that resolutions for New Year’s might make sense.  Just to be clear, if you determine that you need to make a financial change in your life, don’t wait until January.  However, experts say that being able to measure your progress toward a goal or seeing how well you stick to a new resolution can help motivate you to stick to your new habit.

Let someone else do the work for you

Since the tax year for most individuals coincides with the calendar year, you will find that much of your financial reporting is based on the calendar year.  For instance, your paystub will give you current and year-to-date numbers.  Your banking and investment statements will give you current and year-to-date numbers.  Many personal financial software packages show your year-to-date numbers as a default.  They make it easy to see what you have done financially since the beginning of the calendar year.  If they are going to make it easier for you to measure your progress since the New Year’s Day, then you may benefit from taking advantage of the information they provide you – easily see how much you have made this year, how much you have spent this year, how much you have saved this year, and so on.  Let someone else do the work of determining how far you progress every month or every pay cycle.

Is that the most important day?

However, there may be more important dates in your life.  For instance, you may have just paid off student loans, or your mortgage, or another debt.  That is a significant milestone.  Perhaps you are measuring your progress since that milestone.  In that case, use that date as the anniversary for evaluating your progress on a new habit or goal.  Maybe it will be your wedding anniversary or the birthday of a child.  Use whatever date makes the most sense for your situation.  You may have to do some more manual tracking or adjusting defaults in your financial software.  Often the reminder of the milestone event is motivation to stick to your new habit.

Make it easy

Change can be difficult.  If you determine that you are going to change a habit, it makes sense to make sticking to your new habit as easy as possible.  If being able to easily see your financial numbers provided for you by your employer, your financial institutions and your personal financial software will make you more likely to measure and reinforce your progress, then starting at the beginning of the calendar year might be the way to go.