New Year Resolutions

Justin Wolff (Guest Writer) @ Lucid Living

Long-distance Sprinters

Remember those guys at school that ran the 1500 meters race like it was a sprint?  They were never the winners – I’m talking about the guys who took off at full pace and looked fantastic until the first bend.  Then the rest of the field overtook them and they’d end the race walking, usually a good minute after everyone else had hit the showers.

I always think of those guys around this time of the year when I catch myself making New Year’s Resolutions.  You know the resolutions I mean:  lose the excess weight I picked up over the holidays, run a marathon, pay off all my debt, get that Aston Martin and bring peace to the world.  All by January 23rd.  Why is that?

Realise your limitations

“When we don’t understand ourselves properly our worldview and consequently our perceptions are limited,” says Dr. Vanessa Thompson, a Clinical Psychologist. “We are then unable to read the reality of a situation accurately.  In order to progress, we have to recognise our limitations and then either overcome them, or think laterally to incorporate their strengths into our game plan. Finances especially have a very complex role in our lives.”

So what are some realistic and achievable financial goals to set for this year?

“Everyone’s situation is different,” says Iain McKenzie, a Certified Financial Planner at Roberts, Delport and Thomson Wealth Management, “But if you do nothing else, resolve to take just one step towards intelligent financial planning.  Many people are in denial about where they are financially, or about their financial lifestyles and spending habits.  They fool themselves that they are in a better position than they actually are or that something will happen in the future that will bail them out.  Change only happens by taking progressive, measured steps in the right direction.”

The most important steps he suggests are:

Take stock. Realistically identify your current financial position.  Be brutally honest with yourself about where you are financially and where you need to be.

Commit.  Decide if you are prepared to change your financial lifestyles and spending habits and commit to change.

Budget.  Prepare a realistic budget based on your earnings and identify the costs that are most important.  If you’re procrastinating about money (and most of us are) stop and change any poor financial habits as soon as possible.

Manage Debt. Analyse your debt and manage it appropriately.  Not all debt is bad – using debt to purchase growth assets such as property is a good thing.  You’ll also need debt to buy a car, but make sure you don’t buy beyond your financial reach.  Never fund short-term consumption with long-term debt.

Get Help.   Find a financial planner when you are ready – they can add great value to your life.  Understand that financial planners are not necessarily debt counsellors or people who can make you rich quickly – they are there to help people acquire wealth and protect wealth.  Remember that a financial adviser can only help people who are committed to implementing the first four suggestions above.  Only take financial advice from a financial planner who is licensed and properly qualified.

Generally, resolutions are only ever accomplished in the long term with renewed resolve at our low points and proper application at the highs,” adds Dr. Thompson.

So look at your year (and your life) as a long race.  Set small goals that link into your big goals.  Take it one step at a time.  And remember to pace yourself.