Financial progress comes second only to goals around diet and exercise when it comes New Year’s resolutions, and yet, many folks don’t know where to start when it comes to mapping out a financial future. While most of our resolutions understandably tend to be proactive, there is often just as much benefit to be had from excising a bad financial habit as there is adopting a new, positive one. With that in mind, we’d invite you to consider this list of potential financial do’s and don’ts for the new year:
20 resolutions for 2020:
- Spend less than you make, period
- Work with an advisor to get a formal financial plan
- Own the world: diversify within and between asset classes
- Splurge, but only infrequently to maximize happiness
- Read at least one book per month
- Invest in your mind and skillset
- Spend money in ways that increase happiness: charitable giving and time with loved ones
- Automate every part of your financial life
- Teach someone else about the power of saving and investing
- Learn to savor and appreciate what you already have
- Save at least 1% more than you did last year
- Check out your credit report
- Declutter: get rid of everything you don’t use or love
- Make a (realistic) budget
- Track your net worth
- Make one extra mortgage payment
- Create a “vision board” with your three top financial goals
- Make bite-sized financial goals with rewards for completion
- Choose experiences over stuff
- Rebalance at least yearly
- Benchmarking to the S&P 500
- Keeping up with the Joneses
- Conflating negativity and bearishness with sophistication
- Unnecessarily complicated products
- Confusing a place to live with an investment
- End of year price targets and specific forecasts
- Raising lifestyle when income rises
- Reaching for yield
- Watching histrionic financial news coverage
- Depreciating assets
- Confusing our desires for an asset with its future trajectory
- Talking about 10% corrections as though they are rare
- The idea of getting rich quick
- The illusion of certainty when it comes to markets (or life, for that matter)
- Unnecessary consumer debt
- Co-signing loans
- Short-term thinking
- Sacrificing health and happiness for a paycheck
- Assuming that the future will look like the recent past
Tagged: Daniel Crosby, behavioral finance, financial resolutions