It is almost the end of 2017 and as usual, many of us will begin to reflect and set resolutions for 2018.
Some of these might look like: eat healthier, travel to Japan, learn a new language, clear the PTPTN debt, etc.
It’s easy to come up with a list of dreams and goals, but executing them is often the hardest part.
When it comes to setting your financial resolutions, you first need to have a very strong grasp of what they are.
Three common financial resolutions are: reduce debt; retire comfortably; increase savings.
While these are all great overarching resolutions to have, achieving them isn’t as clear-cut.
How exactly will you reduce debt, retire comfortably and increase savings?
When setting financial resolutions, it’s first important to identify why this is so important to you.
AKPK recently shared that 50% of Malaysians are not financially ready for retirement, with many saving too little.
A survey by Bank Negara Malaysia revealed that three out of four Malaysians find it difficult to raise even RM1,000 for an emergency, such as the need to repair a vehicle.
These two statistics alone should be enough to spur you on towards long-term financial planning, after all, these are dire situations to be in.
Without financial resolutions in place, most of these alarming situations will continue to be ignored and further worsen.
You need resolutions in place to ensure you are not in the same financial position year-on-year.
Make realistic resolutions. Once you’ve identified the ones that are important to you, ensure that they are achievable.
A vague resolution like, own my dream home within the first year, is not going to work and you are most likely setting yourself up for disappointment.
Break your resolution up into bite-sized goals that are specific and will ultimately help you achieve a long-term vision.
For instance, this year you could set aside 20% of your income towards a savings account that will be used as a down payment for your home and you aim to collect RM5,000 by the end of the year.
Know yourself. Going hand-in-hand with identifying resolutions that are important to you, you also need to understand your spending and saving patterns. Do you tend to spend when you’re feeling upset?
Are you thriftier and over-think every purchase a million times? Resolutions work best when it is closely aligned with who you are and what’s important to you.
You are then able to take thoughtful steps based on what helps you or what distracts you from your goals.
This might require self-reflection but that initial hard work will pay off when you find yourself a step closer to resolutions that you care about.
Visualise your goals. It’s just how humans are programmed to function. Have a visual board to serve as reminders of your resolutions.
A picture of your dream home, a picture of your dream holiday, or even a picture of a dream car.
Whatever it is that you have identified as a resolution, put it up there. Keep it somewhere you will see daily, it could even be a photo album on your phone.
The constant sight of these images will help keep them top of mind whenever you’re making a decision that could help or distract you.
Don’t forget to have a little fun and treat yourself whenever you achieve little milestones along the way.
You could do a six-month check in to see how far you have progressed and if you’re on track.
Adapt to changes if you need to. Fulfilling your financial resolutions will require you to adopt new behaviours or to change your view money.
For instance, reduced dining out or cutting back your Starbucks coffee intake.
Realistically, there will be setbacks along the way as our old habits may die hard but don’t let it get you down.
Change your approach or adopt a new plan but whatever you do, don’t give up on your resolution. Be prepared for setbacks and tackle it as it comes along.