Resolve to make 2018 a very profitable year

HAPPY New Year! As we kickstart 2018, you’ve probably made a few resolutions.

It’s not a bad idea — simple lifestyle changes can improve our health and put valuable dollars back in our pockets. The trick, however, is to make your resolutions last the whole year, and that can call for a couple of clever strategies.

Resolutions often involve our wellbeing, and goals like quitting smoking for instance, are definitely worthwhile. Along with health benefits, if you’re a pack-a-day smoker you could save more than $10,000 annually, and potentially halve your life insurance premiums.

Even small steps like swapping three takeaway dinners for homecooked meals each week can see you save $3120 over the year, according to comparison site Mozo.

The problem is that even with the best of intentions, our resolutions rarely make it past Valentine’s Day. So here are a few tips to make them stick.

We tend to set overwhelming goals like “I want to get out of debt”. A better approach is to set a small but specific targets.

Something like “I will pay an extra $100 off my credit card each month” makes it easier to stay committed to your resolution and track your process over the next 12 months.

Technology can take the hard work out of keeping up with financial goals. If you’ve made a pledge to “save more”, try breaking it down into a bite-sized target like “I plan to save $50 each week” (or whatever your budget will allow). Then set up an automatic funds transfer of this amount from your everyday account into a savings account.

With savings on autopilot, after a few weeks, unless you are on a very tight budget, you won’t miss the money. Start today, and by saving $50 a week you could have $2600 by the end of the year.

If you have resolved to save more for retirement, ignore what your friends or peers are doing, and focus on your own goals.

Researchers from Harvard University ran an experiment to see how much more workers would contribute to their retirement if they knew what their colleagues were contributing. It turned out this discouraged people from adding to their nest eggs. Many were demoralised by the sums some of their colleagues were able to save.

This highlights how building wealth isn’t a matter of keeping up with the Joneses. It’s about setting your own goals and working towards them at the pace you can manage.

With some clear goals and a plan to achieve them, 2018 could be your most prosperous year yet! Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.