A Brand New Year

Happy New Year blog fans! I have always liked the beginning of a new year simply because it is symbolic of a chance to start over and to improve. And believe me, nobody needs improving more than I do, which probably explains why I like the New Year so much. After all, at 12:01 AM on January 1st I can honestly so "It has been a great year so far...I haven't messed up yet!" 

I, like most everyone else, create a list of resolutions that I intend to keep for the New Year. However, I do something else that many people do not, and that is to review them periodically to assess what I am doing right and where I need to try a little harder. Believe it or not, this is also a step in research, operating a business, analyzing a system, and the list keeps going. It is also the most overlooked step in all of the steps in each of these areas. People are great at coming up with an idea or a research topic or a business plan, but once they implement it, they often fail to analyze whether or not it is successful or doing what it was supposed to do or giving the desired results.

Reviewing and making changes is an integral part of personal budgeting as well. Step 1 is to come up with your financial goals, such as how much money you want to have saved up for a major purchase, your retirement, college for your kids, etc. Step 2 is to analyze the inflows and outflows of money to get an idea of your current financial condition. So far so good, unless you don't have very good records to rely on for the numbers. Step 3 is to analyze the spending while looking for areas where you can save some money. This is where you actually begin budgeting, first deciding how much you have to spend for fixed and variable necessities like rent, groceries, utilities, and car payments, as well as deciding how much to spend on extra things (the frivolous stuff) like eating out, movies, and that daily latte, as well as how much to save back for your goals that you developed in Step 1. 

Step 4 is where you record your actual inflows and outflows over a period of time while trying to follow your new budget. It is somewhere between Step 4 and Step 5 that things often begin to fall apart though. You see, Step 5 is to review your performance to the budget and goals you set up and make any necessary changes. Some people give up on Step 4, while others don't even do Step 5. The break down in these last two steps are the second most common reason people aren't successful in personal financial budgeting following the lack of motivation and determination (psychologist call this behavior modification). 

But don't despair, and don't give up. Just like January 1 is your chance to start over on your resolutions, there is no rule that says you can't start over on your budget. Just use Step 5 as a way to review what worked and what didn't, and revise your goals and budget (and your spending). If your problem was motivation and determination, use Step 5 to find ways to keep you focused on your goals and budget as well as ways to modify your spending and behavior. And a bonus for reading this week’s blog, you can always start your resolutions over too without waiting for January 1.

And by the way, if you must know, I have accomplished one goal I set out for this year, which was cleaning up and re-arranging my study (see the picture below). However, I have already broken one of my New Year’s resolutions, which was to start being on time (evidenced by this blog post being three days late). Oh well, I plan on starting over tomorrow on that one.

Till next week, keep trying and don’t give up!