new year resolution

This is the time of year when the locker rooms at the gym are a little less crowded, the change from wine to nighttime tea switches back to wine, and the morning meal preparation for the day reverts to the sandwich shop.

As we near the end of the second month of the year, financial resolutions can also start to take a back seat.  They might be:

  • Save more money
  • Plan better for taxes
  • Be more charitable
  • Make more money
  • Better understand your spending

Who knows how far back the angst of making our resolutions sustainable goes – I’m sure further back than Dick Clark’s first ball drop in 1973 (enjoy a minute of Times Square disco).  Regardless, here are some reflections on making your financial resolutions a little stickier.  Maybe you can relate to some.

  • Reasons first, then answers.
    • Knowing why we’re trying to accomplish something comes before the answer.  My first question for current and prospective clients is usually some version of, “what’s this all for?”  If I don’t have the answer to that question, I’m confident we will derail (or not do nearly as well as we could have).  Planning can be very flexible, but without laser focus on why we’re doing what we’re doing, short sighted thinking will inevitably find its way.  Because we are human, without focus on why, we become discontent with boredom, we get distracted by our peers, and we crave for more.  We need to stay focused on our reasons – for many, I find this to be their families.  Others, it’s charity.  Still, others, it’s themselves.  None are wrong, and it’s likely some combination of all of it, depending on your phase of life.
  • Start small and keep it incremental.
    • Simon Sinek, author of the The Infinite Game, has a tremendous quote: “People don’t fear change.  People fear sudden change.  People fear revolutions.  People don’t fear evolutions.”  Many times, I see this involving two spouses.  One spouse has great intentions to improve their financial well-being or has a change they’d like to implement.  Rather than introducing and implementing the plan through thoughtful and slow increments, we expect the other spouse to jump on board immediately with the ‘sudden change’.  For instance, allowing for 12 months of small changes vs introducing a large concept with expectation of immediate action is far more effective.  Take this one step further: imagine an entire decade of slow positive change/improvements vs a decade of bulldozing your way through with some change embraced, some not, and frustration built.  Patience is required and we need to play the long game.
  • It’s not just about cutting.
    • Here’s some good news.  I think financial New Year’s Resolutions are frequently associated with cost cutting and having less fun.  A mentor throughout high school and college once said to me, “If you keep whittling, eventually, you have no wood left.”  Yes, make more than you spend.  But, recognize, your top-line is unlimited.  You can only cut so much.  Perhaps your resolutions could be around creative ways to increase your top-line.  Never has it been easier to do rewarding freelance work – whether you’re in college or if you’re retired through services like Upwork and Fiverr.  Taking the first, small and incremental step, is the only thing that stands in the way.

Industry colleague, Nick Magguili, wrote a poignant and very data driven post a couple weeks ago regarding this exact topic in The Biggest Lie In Personal Finance.  Data repeatedly tells us that more focus should be on increasing income vs decreasing expenses.  Increasing income also focuses on our abilities to contribute, whereas cutting costs typically focuses on removing ourselves.


If you establish your reasons before your answers, you’ll be more strategic.  You’ll feel more like you’re playing chess, than playing bumper cars.  Develop strong enough reasons, or a strong enough why, so that we don’t default to old patterns.  In other words, establish what you hope to accomplish for yourself, your family, and others before you arrive at the size of your desired nest egg.

If you start small and keep improvements incremental, you’ll reduce the likelihood of being derailed.  With every client, I talk about momentum.  No meeting or phone call is left without action steps.  It doesn’t matter how big or how small, momentum is so crucial.  For the same reason that big changes are hard to make happen in large organizations, so too, it is hard for you to implement big changes to your financial plans and habits.  Start small, and chip away.

There’s great news in that your resolutions probably shouldn’t look much like most of the financial media suggests.  It’s not just about cutting.  If you care enough to read this, your expenses are likely not out of control.  Your income is more impactful than your expenses.  There is no secret to building and keeping wealth: it’s a high income and using that high income to buy income producing assets.  That’s it.

You don’t have to wait until 2021.  Reflect on your reasons, start small, increase your income.  Also, I think we’re better off not viewing these linearly.  Each concept feeds the other.  Your reasons will feed your initiative to take first steps, albeit small.  Small steps will incrementally increase your income.  Increased income can accelerate the fire and add resources to your very worthy reasons.

Stay calm. Stay invested.

Thanks for reading,

See disclaimers.


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