The Best Financial Advice For The New Month…Screw The New Year!
Welcome to a brand new year. This is the time of year when financial writers, health gurus, personal trainers, and self-help experts come out of the woodwork to give advice on how to live prosperously in 2016. Much of the advice you’ll be reading is excellent and obvious, and only needs to be said because of how difficult it is to follow. Eat less, exercise more, spend less, save more. If it were that easy, we wouldn’t need the advice in the first place.
So I’m going to skip telling you that you need to have a financial strategy if you want to build long term wealth. I’m also going to skip telling you that keeping a tight budget or automatically investing out of each paycheck is the fastest way to save money and understand your finances more thoroughly. Instead, I’ll tell you a story about my very successful 2015, and how you can use it to your advantage in 2016.
I, like most people, have never been very good at New Year’s Resolutions. This is probably because the human condition was not meant to survive prolonged deprivation or ambiguity, and most of our resolutions are either too vague like “exercise more (even though I don’t want to)” or involve personal cruelty like “don’t eat sugar (even though I love it).” 365 days is a long time to do some wild new lifestyle change, financial or otherwise.
So a little over a year ago I resolved to do monthly resolutions. In January I didn’t eat sweets, while in February I didn’t drink alcohol. In March I flossed every day. Even this trend failed me, and I stopped coming up with monthly resolutions in October. But the short goals worked. I found that the less ambiguous the goal was and the more defined the time limit, the more likely I was to actually achieve the goal.
For instance “Don’t bite your nails” which was April’s goal, was much more successful than “Don’t go to bed stressed” which was August’s goal. The problem is that I didn’t tell myself how to de-stress or set a strict bedtime for myself which made me incapable of creating a routine around it. A better goal would have been “meditate at 9pm every night.” I think I just figured out what my February 2016 resolution might be.
Even more exciting, I kept most of those goals in part or in whole. I still floss almost every day. In July I started running, which I had never done before in my life. I set a goal of 100 days, which I didn’t meet (I got to day 54), but I probably run once a week now, and workout about 4 days a week in other ways. This activity is a huge improvement over my previous sedentary lifestyle.
So let’s bring it back to finance. I already have a robust financial plan, and breathe personal finance day in and day out, so none of my resolutions this past year were financial. But the same principles apply to any type of resolution. Potential resolutions could be “spend nothing on clothing” or “don’t eat out this month.” It’s a lot easier to stick to something for 30 days than it is for a year. People are pretty good about rationalizing decisions both good and bad, so even though you might have lots of clothes, 365 days (or 366 in 2016) without buying any seems extreme. 30 days? Totally doable even for the most fashion obsessed.
And remember not to set goals you know you can’t achieve. While “record my daily transactions in a spreadsheet at 9pm every night” is a much better goal than “keep good track of my finances this month,” it’s probably not realistic. Are you home by 9pm every night of the month without exception? A better goal would be “record my finances twice a week on Sundays and Wednesdays.” I found that making the goals as unbreakable as possible (I am capable of getting in front of a computer 99% of the time on Sunday nights) makes me more likely to achieve them.
The best part of this year long experiment was that I actually tricked myself into believing I wanted to do some of these things. As I mentioned earlier, I now floss daily and I feel the deep gaze of shame penetrate my soul when I don’t at least do a small workout. This January I’ll face the biggest challenge yet, not eating cheese for an entire month. Anyone who knows me knows this is probably an impossible challenge for a week, let alone a month, but it’s a brand new year, so as far as I’m concerned, anything is possible.
Nathan is the Chief Financial Advisor at Monte Largo Financial