It is a truth universally accepted that New Year’s resolutions last less time than it takes to digest your Christmas meal.
Do you think that New Year’s resolutions about money fare any better?
Probably not. ‘Save more money’ is a popular New Year’s resolution, up there with ‘exercise more’ and ‘lose weight’, and just like ‘exercise more’ fizzles out by mid-February, saving more money lasts until we recover from the wasteful excesses of celebrating Christmas.
Here is the thing, though:
Whether your New Year’s resolutions fizzle out like an open bottle of champaign or change your life depends on how specific they are, how challenging they are and how much archiving the goal(s) behind the resolution excites you.
My life changed because of a New Year’s resolution.
In December 2009, we had £100,000 consumer debt and faced financial ruin.
By February 2013, we had paid off all our consumer debt.
By February 2015, we had £100,000 new investments.
All because on December 31st, 2009, I wrote on a piece of paper:
‘I will turn around our financial situation.’
It was my first New Year’s resolution in a decade. I knew what it meant – pay off the debt and keep going. It was challenging enough to create a buzz, and being debt-free and never waking up in the middle of the night worried about money was a goal that excited me.
See, New Year’s resolutions can work, and if you follow through on them, they can change your life. Here are five resolutions about money you must try in 2022 – they may just transform your life.
#1. Pay off your consumer debt
If you make one New Year’s resolution about money for 2022, make it about paying off your consumer debt.
We are facing a severe debt crisis. Just to put this in perspective, according to statistics, the average adult in the UK is over £30,000 in debt (excluding student loans). A recent poll found that as many as eight in ten people in the UK are concerned about their debt level.
It leads me to believe that very likely you, friend, have some consumer debt. How does it make you feel? Because I still remember the stress of living with debt, the uncertainty it brings to life and the resentment for having to pay a heavy price for past transgressions instead of looking forward to future adventures.
Decide to pay all your consumer debt off!
Make it specific by getting to know your debt: how much is it, who are your creditors, and the interest you are paying on your debt, decide which debt will fall first. Make it challenging by setting your heart on a tight deadline because even if you don’t meet it, it is better to shoot for the stars, right? And make paying off your debt exciting by imagining all the opportunities this will afford you.
Here are some resources you can use to pay off your debt:
#2. Learn to want less
We live in a consumerist world and are continuously bombarded with inducements to overconsume.
We consume food, services, education, and entertainment. At the same time, our lives, wallets, and bank accounts get out of balance. For instance, we may spend more time on Netflix than on our studies and work.
And the more we consume, the more we want to consume. (Some call this ‘lifestyle inflation’, but it is an expected outcome of our capacity to adapt. You know, the new sofa you lusted after and lost its lustre after a couple of weeks in your sitting room? That is what I am talking about.)
I encourage you to decide to learn to want less during 2022. Wanting and not having leads to feeling deprived, and your willpower will inevitably snap. Learning to crave less keeps you off the path of temptation and is the painless way to limit consumption and stop wasting money while cluttering your environment.
#3. Master one new skill
We all want a prosperous life, right?
Still, this simple dream is out of reach for most of us. It is not because there is something wrong with the dream but because the way we live is not aligned with it.
Let me ask you, how many hours did you watch TV yesterday? I am asking because someone close to me spent six hours watching TV shows just the other day after telling me how cr*p is his life.
I believe that living a prosperous and fulfilled life is more about the process than the outcome. And the process is learning.
Commit to mastering one new skill during 2022. It may be anything; it may be cooking, networking, coding, dog whispering – anything at all. Achieve mastery instead of consuming entertainment.
Your life will change, trust me.
#4. Start saving regularly
That is very straightforward – you must start building savings and start now.
Most of us don’t save. We either wait for the vast one-off windfall we will put on the side (you have heard all these jokes about winning the lottery, right), or we never have any money left when life is done at the end of the month.
Resolve to start saving regularly in 2022.
You don’t have to save significant amounts; you can decide to save £30 every month. It adds up, and if you do it, you will end up with £360 saved at the end of the year. Even better, you can try to increase your saving rate from month to month. For example, you can decide you will save £10 more than the previous month. You do the sums! (I will just mention that this increase relies on adaptation as well – you will adapt to not spending £30 of your wages, you will adapt to not spending £40, and so on.)
You can do it, but you must make saving regularly as easy as possible. Don’t wait till the end of the month; do it immediately your wages hit your account. Don’t do it manually; set up a direct debit. Resolve not to touch your savings (or dip in only when you absolutely cannot avoid that).
You will not believe how much better life is when you know that you have some savings to fall on. My grandmother used to say that her savings are her ‘white money for black days’.
#5. Keep your mind on your money
I stole this one, I admit. It is from a rap song called Money Maker where Ludacris croons about keeping his mind on his money and money on his mind.
You don’t have to be obsessed with money, but you can’t afford to ignore it either. Ignoring your money is likely to end in disaster: when we were building six-figure consumer debt, I didn’t look at our bank statements for months, even years.
Now I check our accounts – current, savings and investments – every week and have organised our money so that it is easy.
Can you guess when the last time we went into overdraft was? Over four years ago!
Decide that in 2022 you will make a habit of keeping your mind on your money – it is empowering, and it will change your life.
There are many New Year’s money resolutions you could make.
I believe that these five are the key to mastering your money and transforming your life. To recap, please resolve to:
- Pay off your debt because it sucks your life force and deprives you of a future.
- Teach yourself to want less to optimise your spending without sacrifice, deprivation, and suffering.
- Master one new skill to open earning opportunities and get you onto a learning trajectory.
- Save regularly, albeit small amounts, for a secure life and planned treats.
- Keep your mind on your money and check it regularly but not too often.