New Year's resolutions – and why you shouldn’t make any
The New Year is traditionally a time for changing your behaviour and setting out long-term plans. So why is Adrian Kidd – Lifestyle Financial Planner at Radcliffe Newlands – arguing against it? Here’s his alternative take on how to succeed in 2017.
It is that dreaded time of year when you may have (drunkenly) spelt out your long-term ambitions to people close to you, while they may have done the same. But the harsh reality is that most resolutions, if made at the very start of the year, have probably come about without much thought or planning as to how you will achieve them. They aren’t plans so much as hopes: they are what we would prefer our future self to look like. Chances of success? Not high.
The main reason why a majority of resolutions fail is the conflict between your current self and this (idealised) future self. This leads to your current self (who holds at least 75 per cent of the power) to procrastinate or gradually wear down your resolve to change your ways. In short, although your current self can see the sense in saving £200 a month for when you are 70 and wish to retire, it can also see plenty to spend that £200 on right now. Most of us are heavily biased in favour of ‘live for today’, so it’s our future self who is forever drawing the short straw. We all go through this struggle on a daily basis – which is why a resolution made a single, possibly hungover day has such a small chance of coming true.
So how DO you turn over a new leaf?
Let’s face it: promising yourself a reward when you are 70 is never going to work. What we need to do is create systems in our lives that make the payoff a little bit more immediate. We can do this by engineering some shorter term rewards, while at the same time reminding ourselves of the pain of not taking action.
A system (rather than a mere resolution) will help us towards a practice of consistency – a key ingredient to success in all aspects of life. It’s not what we do once in a while that will define our lives, but we do on a consistent basis. For instance, you might say to your financial adviser you want a pension fund of £500,000 aged 65 – but as a goal on its own, that’s pretty meaningless. What you need to do instead is focus more on how you will get there, and whether that really is an achievable goal given all the other demands on your income. And how will you motivate yourself along the way? Could you, for instance, build in rewards for yourself at every £50,000 you save up?
Your strategy needs to be simple and elegant, and the resulting plan must be reasonably easy to commit to. In particular, it must be very easy for you to start. It’s actually good to start without too much thought at all – this is a long game, so you can figure the rest out later. If you are told you have to save £1,500 per month to meet your goal, you may be put off before you start, as this amount is not realistic for most people initially. But every year of delay or dithering makes this number higher still, so by making a ‘rolling start’ with what you can afford, you can keep things under control while you work out the most effective strategy. Start small, and you’ll find that you can build over time.
Ultimately, your chance of success in 2017 and beyond comes down to how much you want it. Create the hunger for your goal by putting yourself in your future self’s shoes and picturing the rewards, then put the steps in place whereby that goal can be achieved. Having a simple but effective system to which you can commit provides huge long-term reassurance, as even when the wheels come off (as they usually do) it’s easy to get things moving again. Above all, remember that you’re doing this for you.
I’ll finish my New Year pep talk with another favourite tip. Remember that every £100 you save delivers returns of over 100 per cent. How? Because not only does it generate growth and interest, but it’s also £100 that you haven’t spent – so you’ll always have something on your bottom line to show for it.
So let’s forget resolutions, and make 2017 the year of the system.
Happy New Year!
Adrian Kidd is a Lifestyle Financial Planner at Radcliffe Newlands. With over 20 years’ experience, Adrian has also been featured extensively in the trade press, as well as on national TV and radio as an expert on money matters.