How to keep your New Year’s financial resolutions
With a new year under way, chances are a lot of people will be making New Year’s resolutions and no doubt some of them will be financial in nature. The problem is that resolutions often go unresolved: You plan to lose 10 pounds, or get more exercise, or put money in your RRSP, but by the third week in January, you’ve already given up.
What can you do to make this year different and to keep your resolutions – at least your financial ones – all year long? Here are some tips that may help.
Make it personal
The resolution needs to be something that is essential to you. We can’t offer a checklist because you need to choose something personal, a specific item related to your financial life. For example, start a Registered Education Savings Plan (RESP) for your child, start saving for a vacation property down south, or provide seed money to a budding entrepreneur.
Make it achievable
While we all have financial aspirations, try to keep your resolution realistic. If you resolve to be mortgage free by the end of the year and your mortgage is $400,000, you may not be able to achieve that target without making significant sacrifices in your lifestyle.
Break it down into steps
Like any kind of goal, a resolution is easier to achieve if you break it down into a number of smaller steps. For example, suppose your resolution is to make a will. Step 1 might be to take inventory. Make a list of all your assets and all your debts. Step 2 would be to identify your beneficiaries and how you want your assets distributed to them as part of your estate. Step 3 might be to choose your executor and Step 4 to call your lawyer and make an appointment. For each step, set a deadline and enter it on your calendar.
If you miss a deadline, don’t beat yourself up. Try again or at least try to accomplish some of your target. For example, if your resolution is to “put $500 a month into a spousal RRSP” you might only be able to put $200 or $300 in some months. But so long as you’re putting something aside, it’s a step in the right direction. Remember, people who successfully quit smoking often make two or three attempts before they finally make it.
Make it concrete
Whatever your resolution is, be as specific as you can. For example, instead of resolving to “save more and pay less taxes” you might resolve to “contribute $400 to my Tax-Free Savings Account every month.” An easy way to make sure you keep that resolution is to set up a pre-authorized contribution plan.
Financial resolutions aren’t about giving things up or not spending money on things you like to do. They’re about choices – making different choices today so that you’ll be in a better position, financially, tomorrow.
As your financial advisors, we’re here to provide you with support and guidance to help you achieve your 2019 resolution, whatever it may be.