Happy New Year! The New Year is a chance to make some resolutions. It's a time to think about the things that went right and the opportunity to change the things that did not go so well. It is like having a chance to start over and do things differently. Some resolutions involve relationships, personal interests or lifestyle choices. Many resolutions involve either health and fitness or personal finance. While I am not qualified to help you tone your abs, I can give you some tips to help you get financially fit.
What does it mean to be financially fit? In the health world we often use weight as the benchmark. When we use weight as a health benchmark one study by Statistics Canada, suggested that 47.5% of Canadians are overweight and 31.5% are considered obese.
In financial terms we do not have a common benchmark like weight to determine whether you are financially fit. The reason is that financial fitness incorporates so many facets of financial planning like assets, investing, life insurance, estate planning, tax planning, income, budgeting and banking just to name a few. Over the next few weeks, I will offer some of my favorite tips for common financial resolutions people make in the New Year.
Principles of implementation
If you are like most people, resolutions don't work. For example, why is it that gyms are only busy for the first few weeks of the year? Why is it that home fitness equipment gets used for a month or two but then sits and collects dust for the rest of the year?
The results of financial resolutions are much like the results of fitness resolutions. Most people tend to go back to the habits and routines they are used to. This shouldn't really be a surprise to anyone because we are all creatures of habits. That's why most of us watch the same 10 TV channels most of the time despite having 250 choices. Or why we wear our favorite outfits over and over despite having a closet full of options. Or why we drive to work the same way every day and listen to same radio station and eat at the same menu items at the same restaurants.
In order for resolutions to work, they need to become longstanding habits in our daily routines. These habits need to become second nature. The reason most resolutions don't stick is simply because it is very difficult to change our habits. In order to change your habits you need to understand these principles of implementation.
- Just do it! NIKE says it best. All the planning, talking, thinking, dreaming won't get you any results. The bottom line to get results is to start walking the walk and become a ‘doer'.
- Something is better than nothing. Taking little steps is better than taking no steps at all. On the other hand, some people try to do too much all at once and as a result, it becomes overwhelming. Try to implement one habit at a time and you will have a better chance of success.
- Twenty one days to change a habit. Steven Covey says it takes 21 days to change a habit. Given the history of new years resolutions, I think it takes longer than 21 days. Whatever the time fram is, the bottom line is changing your habits requires conscious awareness, continuous effort and significant discipline.
So here's the challenge. Over the next few weeks, I will hopefully share some ideas to help you become better, smarter, richer people. Some say knowledge is power but at the end of the day, it's up to you if you want less debt, more money, more wealth or whatever your financial goal you desire. Resolutions are great to create some motivation but challenge yourself to try to change your habits for a lifetime of wealth.