Dec. 14, 2016 Article

A New Year's Carol: Three Financial Resolutions For You


December isn’t just about the holidays and the traditional activities with families and friends. It’s also about the ending of one year and the beginning of another. Things are about to change. At the beginning of the New Year, I often make resolutions to improve my life. 

This year, in addition to making my physical fitness New Year’s resolutions, I have decided to make my financial New Year’s resolutions before Jan. 1. Preparing for the holidays, enjoying the holidays and the post-holiday cleanup leaves us too exhausted to think about something so important for the coming year. The hardest part will be finding time during December. I suggest finding little spaces of unused time, such as when you are standing in the checkout line, on the treadmill, or waiting at a stoplight.

Now that you have found small spaces of time and a broader thinking space, you’re ready to start creating your New Year’s financial resolutions. I suggest setting three resolutions you can remember all year. To create a framework, draw from Charles Dickens’ 1843 novella, A Christmas Carol. In this story, Ebenezer Scrooge, a bitter old miser, is transformed into a gentler, kinder man after visitations by the ghost of his former business partner, Jacob Marley, and the Ghosts of Christmas Past, Present and Yet to Come. The ghosts’ visits help Ebenezer realize he’s headed down a dark road, but there’s still time to turn things around. 

We face this situation in our daily lives. We don’t want to think about spending and saving, because we feel uncomfortable and as though we are failing. But like A Christmas Carol, there’s always a chance to turn things around.

Maybe in the past you didn’t save or didn’t think about the future. There were mistakes you might have made that still weigh on you today. Don’t worry, the ghost of financial wellness past is ready to help you with your first resolution.  

  • What do you see when you think about your financial past? An old habit you want to change or something you keep putting off? 
  • Do you want to put a stop to thoughtless discretionary spending and use those funds for charitable giving?
  • Do you need to update your will, trust and other estate planning documents?

It’s easier to look at the “here and now.” In A Christmas Carol, Ebenezer viewed his current situation and realized what he could do better in the “here and now” to fix his situation. You can start today. The ghost of financial wellness present will help you focus on a specific resolution that you will be able to tackle and complete in 2017. Here are some things you might see that need some work or adjustment.

  • Increase your contribution to your company’s 401k by a specific amount with the intention to increase the amount you save each year. You can save up to $18,000 each year.  
  • If you are 50 or older, start contributing to the additional catch-up amount, which is capped at $6,000 per year.
  • Have you acquired any money that can be put toward savings or investments today to keep that spending ghost away?
  • What projects are not getting handled? A financial plan? An analysis of your investments’ asset allocation? Insurance analysis? Do you need a thought partner who can help you with goal setting, creating a plan and making sure the plan is executed during the year?

In the closing of A Christmas Carol, the Ghost of Christmas Future shows Ebenezer a dark, grim outlook future for his life. We often don’t like to look that far in the future because it can be uncomfortable, but it’s crucial to think about the future and what we need to do to be financially prepared for it. 

The ghost of financial wellness future will give you pause to think. We are so busy with our daily lives, future planning always seems to be something we can do tomorrow. Tomorrow never comes, but we continue to move down the road to retirement. Envision your future: the what, the where, and the when. Here are some questions to get you thinking:

  • When will I retire and where do I want to live?
  • What will I do with my days? Hobbies, travel, philanthropic work?
  • How am I doing on accomplishing my bucket list items?
  • What legacy do I want to leave to my family members?

You have a framework and a starting place. Embrace the process. Feel free to share your resolutions with me. If you get stuck, give me a call and we can brainstorm.