Another in the “Ask Dr. Per Cap” series from 2018. New content on the way soon!
Dear Dr. Per Cap: My New Year’s resolution is to get my finances on track. Can you offer any practical advice?
Signed, New Year’s Wish
Dear Wish
Ho Ho Ho! With the holidays over it’s time to jump back into the daily grind of work days, school days, and those weekly lip-smacking Indian Taco sales. Hold the onions please! You’re also one of the 40% of Americans who, according to Forbes, made at least one New Year’s resolution for 2019. Shed a few extra pounds, spend more time with family, or finally tackle that credit card debt. Unfortunately, only 8% of us will actually achieve our goals. Failure is usually attributed to resolutions that are vague, hard to measure, or just too darn complicated. So here’s the solution to those resolution woes.
- Keep it clear and concise. Imprecise goals such as I’m going to work harder at managing my money, I’m going to lose weight, or a long list of ideas that that are hard to prioritize and manage are pretty much doomed to failure. Here’s an example of a better way to state a financial goal. “I will save an additional 3% from my bi-weekly paycheck. Then on the first of each month I’ll add those extra savings to my credit card payment.”
- Set a time frame. In order for goals to work we need to have a specific time frame to measure and track our success, for example. “Pay off my $2,000 credit card balance by December 2019.”
- Create a realistic strategy for how to accomplish your goal. “I’ll be able to save that extra 3% by eating out only one night a week, eliminating all unnecessary clothing purchases, and making all of my own gifts for birthdays and holidays.”
- List the biggest challenges you’ll face along with a plan for overcoming them. Here’s an example. “My greatest obstacle will be the temptation to splurge on a new wardrobe for summer. I’ll overcome this by looking at less costly ways to liven up my look; i.e. a new hair style, becoming more physically fit, and searching my closet for brand new clothes I purchased but have never worn.” The last one really hits home for me. If I had a few bucks for all the shirts and shoes I’ve bought over the years but never worn, I could buy a vacation home overlooking Flathead Lake!
So there you have my four step process for success in the New Year along with one final thought. The key to setting and achieving goals is closely aligned with their level of difficulty. This is something psychologists call “flow”. Flow occurs when a challenge matches our skill set and we’re fully engrossed in an activity. This is also when we’re most creative. If a goal is too easy, you get bored. If a goal is too complicated, you’ll get stressed, discouraged, and quit. Lots of luck for a fruitful New Year!
Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit www.firstnations.org. To send a question to Dr. Per Cap, email askdrpercap@firstnations.org.