Each new year, an average of about 59% of South African adults make financially motivated new year’s resolutions. The issue with resolutions is that people tend to jump to the happily ever after instead of mapping out the narrative that leads to happily ever after.
I can’t tell you how many years I’ve personally set lofty financial resolutions and set myself up to fail before I even started, simply because I did not intentionally take the time to map out my narrative to financially ever after.
The great “Financial Resolution Guru,” Albert Einstein is widely believed to have defined insanity as: “Doing the same thing Over and Over again and expecting different results.” I’m kidding about the “Financial Resolution Guru” part but the sentiment remains. I don’t know about you but I am done with the insanity of it all! Can I get an amen?
Auditing Our Current Financial Habits
Before we start mapping out our narrative for 2022 financially ever after, we must audit our current financial standing and habits by honestly asking ourselves questions such as this:
- Do your Finances Worry You?
The answer to this question will reveal a lot about your relationship with money. It’s particularly important that you figure out the root cause of this worry.
I once read an article where an economist described worry as a tremendous opportunity cost. What opportunity are your financial worries costing you?
- What is Your Debt to Income (DTI) Ratio?
Knowing exactly what percentage of your monthly gross income goes toward paying debts, will help you correctly ascertain your actual monthly financials.
Knowing your DTI is particularly important as it impacts your credit. So if one of your financial goals was to buy a house or make some other big purchase, having a high DTI would be a stumbling block for that goal.
- Are You Living Beyond Your Means?
How often have you justified swiping your card for a “much needed spontaneous girls trip,” or a “once in a lifetime sale item”? The answer to these questions will help you reflect on the lifestyle choices that bring momentary pleasure, but long term financial strain.
After we have exhaustively audited our 2021 financials and habits we can now move on to mapping out our personalised narrative for our 2022 financially ever after.
Adopting Healthy Financial Habits
The journey to financially ever after requires us to take baby steps. I know this may sound antiquated in the times of Beyoncé’s internet – unfortunately not even the University of Google can provide us with the cheat sheet.
As with our New Year’s resolutions, identifying and developing new habits requires thought and careful planning.
Experts say that it takes a minimum of 21 consecutive days for a new goal to become a habit.
When setting each goal we must be mindful of our why?
One of my long term goals is to invest in property. For me to be able to achieve this long term goal, I’ll need to set smaller goals (baby steps).
Some of these baby steps may feel tedious but remembering my why will help me keep going. Having the right frame of mind will carry us through the seemingly mundane parts of the journey to achieving our goals.
The financial goals that we set for 2022 must be accompanied by a set of goals that we can incrementally introduce into our lifestyle.
Example of Incremental Financial Habits:
- Regularly reviewing and updating our goals.
- Create a realistic spending budget.
- Identify 2 or 3 people who you trust to hold you accountable.
There’s no denying the fact that our finances impact our quality of life. Achieving financial peace is dependent on us making daily choices that become habits. For more ideas on how to implement and develop good financial habits check out our blog titled Young Women & Our Finances.