Jan 9

Jan 9 The Only New Year's Resolution Your Finances Will Need

Money Management, Talking About Money, Tips and Tricks, Values

Doing this one thing will put you in the position to make great strides with your finances this year and in years to come.

Happy New Year!

If you are like me, you are eager for a fresh start and an opportunity to make some positive changes in your life. As is the norm, I used to make a to-do list of resolutions that I would grind away at until I had either overcome them through sheer force of will, or more frequently decided that they were not that important and discarded them like yesterday’s news.

Now I try to focus on an extremely short list of intentions (no more than three!) that I feel confident that I can make progress on in the New Year. While in the past I focused on areas like my health and fitness or my own personal money management, nowadays I am keen on actions that will grow my business into the powerhouse that I know it has the potential to be (and if you would like to hire me to perform any consulting, education, or coaching services for you or your organization, reach out to me here!).

For you, Dear Reader, I want to use this post to discuss the ONE thing that you can do to make your finances stronger in the coming year and on into the future. And once you do this, you will never have to worry about it again! But before I reveal that ONE thing that you need to do, let’s talk about the old ways of making resolutions that may have left you with disastrous results…

Willpower: It Won’t Work on January 1

Ah, willpower, if only you had more of it, you would rule the world!

You would rise before the sun each morning ready to hit the trail for your daily run. You’d have a kale smoothie for breakfast every morning…and you would like it.

You would zip through your daily/weekly/monthly to-do list with vim and vigor, proudly crossing off each task with a flourish of your pen. You would optimize with precision your time spent on social media, and you would never fall down the rabbit hole of cats-chasing-dogs videos (don’t judge).

And after a wholesome dinner including more kale, you would round out each evening with an hour of reading classic literature so that you could have lights-out at a reasonable hour. Then you would rise early and do it all over again.

If only it you could live that way! You’d be so healthy and wealthy and… But let’s face it, willpower hardly works long-term. Like a muscle, it fatigues over time and you are left tired and needing a boozy butterscotch latte and with a brownie chaser (again, don’t judge).

So many people I know try to harness the secret power they hope they will feel on January 1st to morph themselves into the best version of human that they can be. And as my local baker just told me, by January 13th they will be skipping their workouts and heading to him instead to purchase the world’s best ciabatta.

Habits: They Are Hard to Come By Right after the Holidays

In contrast to willpower, developing good habits can bolster your intentions to live your best life. You can set out your exercise clothes the night before, so there is nothing to do but put them on in the morning. And you can put your gym time on your calendar so that it is there, staring at you and you already have your gym clothes on, so you just go.

And maybe you get in the habit of always going to the grocery store right after you eat. And you prepare a shopping list including fruits and vegetables that you cross off once they are in your cart. And you never shop with your kids, who through some kind of special Spidy-sense can hone in on that one treat you find impossible to resist that they MUST have. Just this once. Pleeaaasseee…

You get my point.

I am not knocking good habits, as they have helped me get to the gym and buy adequate quantities of vegetables (including kale!). But developing habits takes time. And you should not try to pile on every desired habit on January 1st, it’s just too much.

Identifying Your Values: An Ideal Way to Start the New Year

The ONE thing that I’d like to recommend that you do at the start of the New Year is to take a few moments to identify your true values.

Huh? You might be saying to your screen, I know what my values are. Pshaw!

But hear me out. Identifying your values, ideally your top five or three, will help keep you in line with the actions that you want to take to be your best self.

Here is a Values Exercise that I learned from my colleague Ryan Law of Utah Valley University. Take a few moments to take it yourself.

I’ll wait.

What did you find? When I took the exercise I found that it was relatively easy to circle 15 values that I identify with, but a bit harder to narrow that list down to 10. And then narrowing that list down to 5 was even harder!

Did you have the same experience? Did you even complete the exercise? Be honest with me…

So what does identifying your top 5 values have to do with your finances? I contend that by identifying your top values and keeping them front and center, you can align your actions with what you believe is most important for you.

Here’s an example of you values translated into actions:

You value Family = You make sure that there is always enough money in your checking account to cover expenses that might be important to support your family

You value Security = You take a small amount from each paycheck and direct deposit it into your savings account so that you have money on hand in case a financial disaster

You value Freedom = You set up your retirement account on auto transfer so that you are assured that someday you will retire and live your life in the free-form fashion that you value 24/7

As a second exercise for identifying your values, see my Values and Spending Quiz. The focus of this exercise is to answer the question, “If you had an extra $50, what would to spend it on?” You then tally up your score at the end to come up with a ranking of your top values with regards to spending categories. This exercise might take a few more minutes than the first one.

I’ll wait for you to complete it. [Imagine hold music here…]

What did you come up with in regards to your values? Did they surprise you, or did you have a hunch about your ranking?

What I like to tell my students when we complete this exercise is that the top three values are the ones that you should always reserve money in your budget for, while the bottom three spending categories are those where you can mercilessly cut.

For example, Social rates high on my values ranking, so I try to make sure that I can always say “yes” whenever I get invited to do something fun (and yes, I even have a designated savings account for Fun). On the other hand, Car came in dead last on my ranking, so when my car recently turned 10 years old, I decided to hang on to it and drive it into the ground rather than to expend my limited resources on buying a newer vehicle. It is just not that important to me.