AS one year comes to a close, we have a fervor wish that the next year would be a better year. Having a better year can imply having a better version of ourselves.
There are those who draft a New Year’s resolution. This refers to seeking a desired change in attitude or behavior in order to have improvement in life or help in eventually achieving a personal goal.
Resolutions though can be broad or generic. In the realm of personal finance, there are certain resolutions that can be planned for a better financial future.
The first resolution can be to continue doing good things that allow us to be in the right path of managing finances. We can continue doing them but we can do them with better execution.
For example, we must continue to be reminded about our major personal finance goals. These serve as our “North Stars” and help guide us in what we spend, save, insure and invest. We must continue to believe that we have the capacity and the resilience to achieve the goals since the first step to success really comes from within.
The personal finance goals should be our constant guides but the strategies, plans and actions can change given dynamic socioeconomic trends. We must continue to review how effective and how efficient our strategies are in being able to ultimately achieve our goals.
Clear milestones have to be set and progress checks have to be made to ensure that we reach our destination and we reach it in the best way possible. Constantly reviewing our personal finance situation will make us more informed in making decisions.
We must continue to invest in continuous learning. We are our own greatest personal assets.
A wide range of learning resources about different personal finance topics are available. There are various perspectives on different personal finance topics and knowing the different sides of the coin on a topic will convey the information we need in choosing well.
We must continue to be aware of what is happening in the bigger socioeconomic environment since developments can have good or bad implications on our finances.
The second resolution can be to stop doing the things that lead us astray. We must stop treating every expense as a necessity. There is a thing called a necessity and there is a thing called a luxury.
Examples of necessities would be food, shelter, clothing and utilities while a luxury would cover other categories. If we are able to review spending on necessities and eliminate spending on luxuries we do not really need, we will end up with more money even if our salary and other income sources will not exhibit any movement.
We need to stop the bad habit of procrastinating. This is true especially in terms of investing since time is a great wealth ally.
It is true that the early bird catches the worm. It is true that the best time to invest was yesterday. The power of compound interest is the vehicle we get which allows money invested in the past to grow tremendously over time.
By investing early, we shall be able to minimize opportunity costs. Delay in investing could have dire implications like not being able to invest at all due to other activities.
The third resolution can be to start doing new things that add significant value toward the achievement of the personal finance goals. One thing that can be started is to start exploring how to further diversify the personal portfolio.
There might be saving, insurance and investment options that can potentially help improve returns or minimize risk in the current portfolio. Due diligence and research on the options will help in making us decide what to get and how much to get based on our own financial goals and plans.
Resolutions are valuable because they embody positive change. However, a resolution is only as good as its execution. If the resolution is specific, measurable, ambitious, realistic and timely, and, if they emanate from our authentic desire to be better, then both a better version of ourselves and a better future loom.
Gemmy Lontoc is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 80th RFP program this January 2020. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.