Happy New year everyone!!! 2014 was such a very eventful one for a lot of people and I am guessing some of your wishes and aspirations did come through. 2015 beckons and as usual many of us will be looking forward to it with lots of hope. There are certain things you probably could not accomplish in 2014 that you want to redress in 2015. There are also certain vices in 2014 you wish not to repeat in 2015. Most people call this term, New Year Resolutions.
New Year resolutions are typically an opportunity for people to turn the pages in their lives. However, many fail even before they begin. I have been in that situation before and have learnt not to bother giving myself targets that are unattainable either because I don’t have what it takes to change it directly or the catalyst for that change is out of my control. Most of these targets also fail because they are not well throughout and too bogus to attain. One of such targets are financially related resolutions. There are some that you shouldn’t even bother making at all because it is unrealistic. Here are a few examples;
A New Year resolution dedicating to spending less is very unrealistic because it is bogus and difficult to target. Rather than say you want to spend less, it is better to target a specific area of your spending where you think you can easily curtail. It could be that you want to reduce your transportation cost or how much you spend on entertainment. It could even be the amount you spend on fashion or attending weddings. These are specific targets that are achievable.
This is also another New Year resolution that is easier said than done. Whilst most personal finance advocates believe zero debts are a crucial step towards financial freedom, it is not an end to itself. In a free market economy like Nigeria, it is very likely that you finance some transactions via debt. However, there is a huge difference between being in debt and being unable to service debts. A borrower who is able to service his debts as and when due is perhaps as financially independent as someone who has no debts. A better target could therefore be to only borrow to finance absolutely important projects that you can’t save for and have enough cash flow to finance payment obligations. For example, it is probably impossible to save part of your salary every month towards the purchase of a house. However, financing a housing loan through with cheap mortgage rates elevates you from the shackles of being a tenant to a landlord. You can also target not borrowing to fund parties and frivolities that do not create any tangible financial value.
The habit of saving money is one I promote passionately. However, rather than target saving money your targets should be directed towards saving for a purpose. It’s either you want to save for a Post Graduate program or save towards buying a new car. You can also target saving for a wedding or to move to a better apartment. The whole idea is to focus on a savings target rather than just a general savings milestone. Saving money is good but saving money for something is even better.
Starting a business
Nearly every employee you speak to is thinking about augmenting their salaries. Since no salary increase is ever enough to meet your ever-growing expectations it is not inconceivable to have people look for better ways to augment. A New Year resolution based on starting a business is not a particularly good idea. However, if you do not have a business plan already and done all the leg work required to start a business then it can’t be a New Year resolution. By now you should have known the business you are venturing into and the likely date you will start. You should also have concluded all your market surveys and raised the funds you need to start the business. So rather than deciding on a resolution to start a Business you should by now have a set date to start and what business you are going into.
Investing more money
On this column, we promote sound investing for our readers and so any resolve that includes willingness to invest more in 2015 is very much welcomed. However, you can go a step further. Instead of just deciding to invest you should settle down on the types of investment you wish to make this year. Is it treasury bills or stocks or both? Will you be investing in a small business set up by someone else? Whatever it is you decide to achieve this year in terms of investing must be very well researched into and planned ahead of time. Apart from deciding which investment you want to engage in, you must also target a return which you will judge yourself with at the end of the year. How you intend to fund the investments is also an important aspect of investing. Your timeline for each investment and expected return per investment (if more than one) is equally important.
Have a great 2015!!