Helping people build and manage their wealth through the digital age.
We at One Day Advice want to wish you a Happy New Year! This is an exciting time to reflect on the previous year and all of the ups and downs, the wins and losses, and prepare for the new year ahead. Whether you treat this time of year the same as any other day, or you like to treat it as an opportunity for a clean slate, you will benefit from taking a few moments to focus your attention on the following questions.
At One Day Advice, we know that money doesn’t mean everything. We don’t know many people who would schedule out their ideal day to include tackling their finances, analyzing their budget categories, looking for the right investments, or figuring out their financial plan. However, we do know that money plays a part in many of the things that help us construct our ideal life.
Do you want to travel? … Do you wish to buy a boat? … Taking up a new hobby? … Want to commit to a new gym membership?... Do you wish to spend more quality time with loved ones or friends? What activities would you do during this time?... These are all decisions that will have a direct impact to your financial well-being.
The latest resolution study conducted by Fidelity, shows some of the top resolutions that people are choosing for themselves:
Of course, there were financial questions that were asked in the study as well. One had participants list the mistakes they made financially this past year. This included things like dining out too much, splurging on items they couldn’t truly afford, or failing to cancel subscriptions they no longer used or needed.
What mistakes did you make financially this past year? What areas could you improve on? For me, it’s easier to say no to some of the small day-to-day expenses; for example, I take advantage of free coffee at work instead of buying a coffee at a local cafe, or I say no to adding on appetizers and deserts at a restaurant. My weakness tends to be the one-off larger purchases that typically include travel or a self-proclaimed “once-in-a-lifetime” experience. No matter your tendencies, these expenses can quickly add up and make it harder for you to accomplish other financial goals that you may have.
If you keep telling yourself that you want to take more vacations or buy a home, yet you are going out with friends and spending money every weekend, then you better reassess what your “true” priority is. After all, the word priority has evolved and was never meant to be made plural. As Greg McKeown wrote in his book Essentialism:
“The word priority came into the English language in the 1400s. It was singular. It meant the very first or prior thing. It stayed singular for the next five hundred years.
Only in the 1900s did we pluralize the term and start talking about priorities. Illogically, we reasoned that by changing the word we could bend reality. Somehow we would now be able to have multiple “first” things.
People and companies routinely try to do just that. One leader told me of this experience in a company that talked of “Pri-1, Pri-2, Pri-3, Pri-4, and Pri-5.” This gave the impression of many things being the priority but actually meant nothing was.”
What do you claim to be your priorities? Deep down, what is your true priority? Knowing this will provide clarity and direction behind every decision that has a “$” sign attached to it. To reference Econ 101, there is an “opportunity cost” to everything. If you want to travel more, you may have to say no to other fun opportunities that come up and have the potential to eat away at your PTO or your savings.
Another thing to consider is what unknowns or fears you may have heading into the new year. Do these things keep you up at night or impact your ability to live in the moment? In the Fidelity resolution study, they discovered the following financial fears:
If you have financial fears, it’s important to address them. Don’t sweep them under the bed, only to have them creep up on you as you are settling into bed for a restful night of sleep. It’s these fears that a financial planner or coach can help you address and develop a plan around. No one has the ability or resources to eliminate risks, but there are ways to mitigate these risks and prepare for them. That way you can focus your time and attention on what’s important and in your control.
The Key to Change
Why don’t the majority of New Year’s Resolutions last? Most of the time, the specific goals are too drastic of a change to develop a habit for all at once. In his new book Atomic Habits, James Clear writes about how people don’t rise to the level of their goals, they fall to the level of the systems they have in place. Without the systems or habits in place, you can only muster up the willpower for so long. These long-term resolutions are not sustainable without developing the key underlying habits that automate your actions and eliminate the need to incorporate your limited resource of motivation or self-control.As you are setting goals for this new year, breakdown the easy first steps that can be done to cue your mind into naturally following through with the end goal. Energy is a limited resource, and human beings are wired to do what requires the least amount of energy. Your mind will always find a reason to NOT do something if there is any energy required to do it. That is why we must break down our goals and provide the easiest possible route to completion.
If you put in the effort to initiate doing one pushup or to put on your gym clothes, it will make it much easier to follow through and make progress toward your ultimate goal. The goal is to trick your mind into taking easy actions that naturally lead to desired outcomes. These same principles can be applied to getting your financial life in order (more on this to come!).
Whatever it is that you are hoping to do or accomplish this next year, we at One Day Advice look forward to the opportunity to assist you and give you confidence behind each decision you make that has a financial impact. Please don’t hesitate to get us involved or put us to work for you.
Here are some book recommendations to start the year off strong:
We wish you the best this new year!!