Sticking To Financial New Year’s Resolutions


New Year’s resolutions about your diet and your weight rarely work. Temptations are too widespread and frequent. You get tired of working out. You have so many other things to think about, that a resolution to lose 20 pounds in the coming year falls by the wayside.
But making a financial resolution is less an issue of wavering willpower and more about staying focused and making wise choices about spending, saving and investing.
It should not take a special day on the calendar to prompt an investor to make better choices when it comes to financial decisions, but if a New Year’s resolution regarding money matters is an effective way to create a better personal financial picture, then so be it.
Spectrem surveyed 900 investors with a net worth between $100,000 and $25 million (not including the value of their primary residence) and found out that only 11 percent of those investors made a financial New Year’s resolution at the beginning of 2019. The younger and less wealthy the investor, the more likely they were to make a financial New Year’s resolution, perhaps because those two segments align closely and it is the young and less wealthy who need an annual kick in the pants to make wise financial decisions.
What’s interesting about the survey is the financial resolutions that were made by those who made one. Twenty-eight percent of investors who made a financial resolution for 2019 decided to invest more in the coming year than they did in the previous year. That’s not a decision about savings (the answer 21 percent gave), but a decision about putting more of their investable assets into an investment product.
Other than investing more and saving more, other responses were intentions to follow a budget (25 percent), create a new financial goal (such as finding a way to finance a new home or car), and 15 percent said they resolved to reduce their risk level in their investments.
Good luck to those investors with a plan to follow a budget.
Two months into 2019, do you think those investors are still following their resolution, or did that decision fall by the wayside, like that diet pledge?
In fact, that decision to follow a budget is one that could benefit from a watchdog, and investors actually think it would be beneficial for a financial advisor to assist them in keeping their expenditures and investment decisions on the straight and narrow. Fifty-two percent of investors who made a financial resolution said they would appreciate having their advisor check in with them to discuss their financial resolutions.
New Year’s resolutions are not a new idea. People have been making New Year’s resolutions forever. That includes 2018, when 9 percent of investors surveyed made financial resolutions. One year later, however, 92 percent of those investors stuck with their financial resolutions, which is a success rate much higher than those who made diet plans, probably.
There is no reason that people need to wait until New Year’s Day to make financial resolutions. At any day of the year, investors can choose to reconsider their financial options and decisions and adjust accordingly.
But, scheduling an annual meeting with an advisor to discuss financial objectives is not a bad idea, and doing so around the New Year is just a convenient time for reconsideration.
Among the investors surveyed by Spectrem, 36 percent thought a New Year’s meeting with their financial advisor would be a good idea. And, among those who want to have a New Year’s resolution meeting with their advisor, 75 percent want their advisor to revisit those resolutions as the year goes along.
Do people who make weight loss resolutions want that same level of follow-up? And who do they ask for that service? The spouse certainly doesn’t want to do it.


© 2019 Spectrem Group