EVERY year millions of people everywhere make new year’s resolutions. What have you resolved to do differently this year? Studies showed that majority of new year’s resolutions do not last.

However, the pandemic seems to have influenced some people to stick to their resolutions. In the United States, the Fidelity Investments’ Annual Financial Resolution Study found that most people who made financial resolutions at the beginning of 2021 are more confident about the future. During the pandemic they set clear, realistic and specific goals. They were motivated by their progress and persevered to achieve their goals. About 84 per cent of Americans say the pandemic has taught them to ‘let go” of what’s outside of their control. Another 72 per cent believe that they will do well financially in 2022 and 68 per cent plan to have a financial resolution in place for 2022. The major concern for 2022 are inflation and rising cost. Physical and mental health are considered priority for 2022. Interestingly, 62 per cent of the age group 18 -35 plan to increase retirement contribution in 2022. This is a good signal.

Goal-setting & budgeting

The key to maintaining resolutions is goal-setting. Automate your savings. That way the temptation to spend is avoided. Seniors or pre-retirees should save at least 20 per cent of their gross income. Transfer funds from savings periodically for investments. Have small measurable goals and timelines for every goal. A goal without a timeline is only a wish. Retirees and pre-retirees need to review retirement plans. Consult a professional financial advisor. Diversify investments and reduce investment fees. Review long-term investments such as education fund and retirement income. Also examine and assess life and home insurance; estate planning and health care. Evaluate short-term needs, such as emergencies, rainy day funds and mortgage payments. If you are a pre-retiree it’s best to live below your means so you are able to save and invest more. Life expectancy in retirement maybe more than 30 years. Do not spend because you can afford to. Make a budget. Calculate the monthly expenses. The 50/20/30 budget rule may be applicable in some cases. This is a money management technique. It simply means that 50 per cent of your after tax income should be spent on necessities, such as mortgages, groceries, transportation, insurance. And 20 per cent should be saved or invested and 30 per cent spent on wants, such as recreation or entertainment.

The idea of the budget rule is to ensure that funds are available for emergencies and retirement.

Debt reduction

Pay down on high interest debt or consider debt consolidation. Debt reduction is important as you age. Reduce credit card debt. The less debt you have, the more funds are available for investing in your future.

An important resolution for 2022 is to pay yourself first each month. It’s a habit of paying your future self. Pay yourself in the same way you pay a bill. Put aside what is needed to save and invest, then spend from what’s left. The habit of paying yourself last, increases the risk of spending more with little or nothing left to save or invest for emergencies and retirement nest egg.

Another resolution is to limit the number of times you eat out. Determine how often you will eat out in 2022. Assess the costs. Examine how much you will save by eating more home cooked meals. Review your weekly or monthly subscription services. Do you need all the subscription services you currently pay for? Now is the time to discontinue subscription services that are not beneficial. In 2022, resolve to learn more about technology so communication skills can be enhanced. Don’t be left behind in the virtual space. Finally, make financial literacy a new year resolution. Knowledge is power. Your financial health is your wealth.

Grace G McLean is financial advisor at BPM Financial Limited. Contact her gmclean@bpmfinancial. and visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self.

Email her at livingaboveself@gmail.com