Life’s busy – no surprises there - so over time we all develop habits and…
Forget Resolutions, Create New Habits Instead
At the beginning of the calendar year and for accounting nerds like me, at the beginning of the financial year too, we get trapped into the idea of setting resolutions.
The problem with resolutions is that they are mostly ideas in our heads, they aren’t grounded in reality, and possibly we’ve been spurred on by our family and friends to make those massive changes that are just that, massive, and too big to consider realistic.
So, throw the resolutions out the window. By the time you’re reading this, you’ve probably failed at each of them anyway …
Instead, consider creating a few new habits.
There’s that old joke about how to eat an elephant? One bite at a time.
The same applies to any goal you set. It has to be broken down into bite-sized pieces, each one achievable when looked at by itself. Focus on the smaller bites, and as you achieve each one you will get closer to your goals until one day, surprise, you’ve attained that bigger goal that may have been a resolution you’ve talked about for years, but now you’ve done it.
When thinking about habits, consider all aspects of your life, include your health, your relationships, your business and it wouldn’t be me writing this article without including your finances.
Personal financial management is just as important as business financial management.
Whilst I focus on business numbers, having a plan for your personal finances will reduce stresses and pressures there too. That’s not to say that everything needs to be planned to the last cent leaving no room for spontaneity but being conscious of how much it costs to run the household is key. Knowing how much you need to be drawing out of the business helps in planning the business finances.
This may be confrontational in some home situations, but it’s important to set aside some time each month to review the personal finances too.
This is not about pointing fingers over who spent more money than was planned; it’s about being conscious of where your money is being spent.
Two examples come to mind:
- One was a lady who worked school hours. She walked into the office with a coffee in her hand, and she told me she spent between $10 and $ 15 per day on lunch (and another cup of coffee). She had two daughters, and she made up their lunch for them every day. She was always complaining that she didn’t have enough money, but when I suggested that if she made up her own lunch to bring to work, she could have $ 50 to $ 75 more in her pocket each week, she wasn’t interested.
- Another example was when a friend did an ‘audit’ for a few weeks of where her money was spent. She kept a record of everything she bought and paid for. In her case, she was buying $ 50+ of magazines each week. She had no idea it was costing so much, and she decided to cut back to just one or two magazines and put the extra money away into her savings account.
It’s about being conscious of where the money is being spent.
When so much is put on credit cards, it’s easy to lose track of how much has been spent and on what. If you decide to take the next step, which I recommend, and put in place a personal financial budget, make sure you allow for unexpected costs, for surprises, for those spontaneous costs that make life interesting.
I know one couple who have planned out their finances to the nth degree allowing no room for spontaneity at all. Holidays are planned every two years with strict controls on how much can be spent, new cars are planned for every so many years, and nothing extra is allowed for.
Whilst this works for some, I believe that it’s important to enjoy life along the way and to make a decision to go away for the weekend at short notice or buy a special something occasionally without it requiring a finance meeting to discuss what could be eliminated in order to allocate the funds to this new cost.
Whatever you do, forget the resolutions, they’re too hard to keep.
Think instead about creating new habits, making them small enough that you can see yourself achieving them and then once they are in place, set more new habits.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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