Hopefully everyone enjoyed the silly season and Christmas without racking up too much debt.
It’s about now that the media tend to be full of summaries of the last 12 months with catchy titles like “The year in pictures” and “2012, the year that was”. It’s also a time for making resolutions for 2013; with the Aussie economy making a slow recovery and a lot of speculation about the ‘fiscal cliff’ in the U.S now is the perfect opportunity to think about some financial New Year’s resolutions. Guest writer Anthony Fensom talks about the different types of financial resolutions and how to make them stick.
If you are making financial resolutions for the New Year, make them achievable and measurable and write them down, suggests award-winning entrepreneur Phillip Di Bella.
The founder of Di Bella Coffee, Australia’s largest speciality coffee company, Di Bella says he commits pen to paper each year on a one-page “life plan” split into personal, professional and family goals, which he reviews every quarter.
“It’s not a book – it’s a one page document with no more than five goals in each category,” Di Bella says. “If you put more than five in each one, you’re setting yourself up for failure. So when people talk about success, I’m only successful if I can tick off 90 per cent of what I put on paper.”
Di Bella said such goals might include personal targets such as losing weight or learning how to fly, along with financial resolutions such as selling a certain amount of a specific product.
“I find it gives me clarity and makes me set measurable goals, instead of wishy-washy ones like ‘I want to be healthier’.”
Experienced CEO Peter May agrees with Di Bella, saying it is important to set goals that are “achievable and not too long term”.
“We used to admire the Japanese for their long-term viewpoint, and maybe that still works in certain areas,” says May, marketing consultant at Xavca Pty Ltd. “But a lot of times you can’t afford to take the long-term approach because you just won’t get there.”
He says for business owners, cash is still king, and it’s important to not let borrowings take off because interest rates “won’t necessarily stay low as things work in cycles”.
It’s also important for owners to “reward yourself and your staff for your achievements – and provide ongoing incentives for success”.
28 days to change?
Despite popular belief, it can take much longer than 28 days to change a habit or acquire a new one, according to recent British research.
A 2009 study by University College London of 96 people interested in forming a new habit, such as eating fruit with lunch or doing a daily run, found it took an average of 66 days for the new behaviour to take hold.
A smaller subgroup reportedly took far longer than the others, perhaps due to greater resistance to change. The study also found that missing a single day did not affect the eventual outcome.
In setting goals for 2013, it is also important to support them with an action plan as well as finding a support team such as colleagues, family and friends.
Personal financial resolutions for 2013 might include:
- Investing in a managed fund or setting up a high interest savings account.
- Making regular and automatic contributions towards a specific goal, such as a property or business investment, new car or children’s education fund.
- Finding lost superannuation accounts via the Australian Taxation Office’s online ‘SuperSeeker‘.
- Establishing your own self-managed super fund (SMSF) with specific, regular contributions for your own financial future.
- Creating a budget with savings and expenditure targets for the year, and reviewing it regularly.
- Building an emergency fund of one month’s salary in case of any urgent spending needs or loss of income.
- Reducing non-deductible debt, such as credit cards, by a specific amount and tracking progress.
In a recent US survey, nearly half of those polled said they had managed to keep 80 per cent of their financial resolutions in the past, with the top resolutions for the year ahead being saving more, spending less and paying off debt.
Making sure the resolutions last past Australia Day requires putting priority on the top three goals, being selective in receiving information and learning to say no, according to Doug Sundheim, co-author of The 25 Best Time Management Tools & Techniques.
Starting with pencil and paper and writing a one-page plan like Di Bella’s could be an excellent means of ensuring success with financial resolutions in 2013.