Financial resolutions, like New Year’s resolutions, can be difficult to maintain. But good financial resolutions you follow will simplify your life, and make managing and growing your investments easier. Taking some time to address these issues now—and periodically returning to them—will allow you to automatically stick to your plan without the guilt and anxiety of letting them drop by the wayside.
Like a new year’s resolution, a financial resolution takes you through similar steps. Resolving your issue usually involves feelings of regret, failure, and pushing the issue to the side altogether. When you come back to it, you establish unrealistic expectations that you penalize yourself for, thinking this will ensure you will follow through with your resolutions…this year.
Attending to your finances is just about setting realistic and honest expectations and goals. For instance, many people don’t put enough savings aside, and needlessly become penalized by cashing in investment vehicles too early. Others panic and withdraw too early when markets act unruly. Some might not review and rebalance their portfolio yearly. But fortunately, all of this is avoidable.
By beginning the year with a focused attitude, willing to honestly evaluate your financial circumstances, can start you saving money and also earning more on your investments. Avoiding penalties and higher fees involves only a few hours of research and planning. You can easily plan ahead and set a date when you and your advisor will rebalance and review your portfolio. You can also set up automatic withdrawal with payroll at your work to allocate a certain portion of your savings to your investments. Realize that the penalties and extra costs you incur over the long-term can be a significant amount. What is more troubling however, is looking at how much that money could have earned if invested.
In the end, there is no single ideal time to make these decisions. The best approach is a long-term plan with many little tweaks along the way. A fair look at your investments and savings will do more to help you than pressuring yourself and setting expectations beyond your financial capabilities. Don’t put more stress on an already delicate situation. Remaining focused, clear, and consistent with your financial decisions is probably the best thing you can do for yourself this year. Most of us know what should be done. It is following through with what you know that is the most difficult part of a resolution.