December is the ‘feeling guilty’ month. It is the time of the year when we sit down and realise that we did not stick to our resolutions in the year that just went buy.
In this case, the year is 2021, and in December of 2022 it will be 2022. Scene 1, Act 1. Scene 2, Act 1. It is really difficult to stick to too many resolutions, and in most cases we expect too much from our virtuous tomorrow while doing nothing as of today.
The book Atomic Habits has at least taught us that we should try to change a little at a time – so de-clutter your wardrobe, portfolio, table, mind… it works, try it.
So a list of useful financial resolutions include writing down financial goals, converting a big portion of savings into investments, living a simple, frugal life by choice – but choosing dream career, and start saving/investing for retirement.
The list of resolution should also include having regular conversations about money, saving and investing with spouse, kids and parents – all the people for whom we feel financially responsible. If I am a CXO, this means all my colleagues. If I am a school principal, it means all my teachers and non-teaching staff.
Besides, there are some more useful resolutions to make. For example, not to deal in direct equity with current level of knowledge of equities, but to increase financial knowledge – inter-alia by visiting good websites and reading good books.
One should also make a resolution to maintain income and expenditure details diligently and keep reviewing them. Your new year resolution should also include maintaining proper records of assets and liabilities, understanding the risk of each asset class, and doing proper asset allocation.
As part of the resolution to protect those who are dependent, one must review the term insurance, medical insurance and retirement and make sure it is up to date and adequate, and the nominees are current.
I am not saying that these should be your financial resolutions for 2022. I am just saying draw a few from this and start making this happen.
Having too many resolutions can be very exhausting and can fail badly. I have a young friend who has started teaching personal finance to her children – aged 12 years and 7 years. She has started teaching them gratitude, and de-cluttering.
She makes her children say thanks to their servants – a cook, a maid and 2 drivers. They say thanks every day, and on the day that their salary has to be paid. A great start for kids that young.
Similarly, you can sit with your parents and tell them how their portfolio is doing. Tell them the importance of making a will. Tell your 24-year-old daughter why she should make a will the day she buys a house.
I am not a person who thinks that resolutions are necessary to make changes in one’s life. However, having a set of financial goals – I mean financial behaviour goals-- is useful.
You can start on 20th December – and waiting even till 1st January, 2022 is not necessary. Happy New year!
PV Subramanyam
Writes at www.subramoney.com and has authored the best seller 'Retire Rich - Invest C 40 a day'