You may be flooded with New Year’s resolutions for 2024 ideas. Let me list down 10 Personal Finance Resolutions 2024 that you must follow and act on.
Whether such New Year resolutions work? According to the study, around 80% of New Year resolutions fail by the end of the first month!! Then why this POST? Let us try to find the reasons behind those failures and make sure that you fall under those remaining 20% successful rates.
The below quote from Peter Drucker and James Clear’s blog post perfectly applies to New Year’s resolutions on why New Year’s resolutions fail in a big way.
People often overestimate what they can accomplish in one year. But they greatly underestimate what they could accomplish in five years.— Peter Drucker
What we need is consistency but not intensity. I wish to start this post with one of my favorite James Clear posts
“Intensity:
-run a marathon
-write a book in 30 days
-silent meditation retreat
Consistency:
-don’t miss a workout for 2 years
-write every week
-daily silence
Intensity makes a good story. Consistency makes progress.“
Intensity means new year resolutions also. Consistency means how you act on those resolutions CONSISTENTLY.
Why do New Year resolutions fail?
# Not mindful resolutions
Usually, such resolutions are made in a hurry and without a second thought. We may call it instant gratification also. Any resolution you make in a hurry without a second thought or a proper plan will end up in failure within few days of a new year.
# Unrealistic goals
Without a second thought, we set some unrealistic goals that are practically impossible to achieve INSTANTLY. Take for example health. You can’t set a New Year’s resolution of you walk or run 5 km a day from day one itself. To achieve that milestone of a 5 km walking or run, you have to start with 1 km, then slowly increase it to 5 km a day based on your body’s capability. But if you notice majority of New Year resolutions, they are built in a hurry with certain unimaginable goals.
# Consistency wins over motivation
By taking motivation from few, you may set certain goals. However, in the investment world what matters is CONSISTENCY than motivation. Motivation may last long for few days or months but building consistency is most important to be successful in any field. This equally applies to the investment world.
I suggest you read the book “Atomic Habits” by James Clear. In this book, he explained how each tiny change in your personal, professional, and investment life will create huge rewards.
# Efforts are more important than the outcome
The effort you make to achieve those goals is more important than whether you reach successfully those resolutions. If you set a goal of investing 60% of your income, then the effort you make to reach at least 50% is most important.
# Instant is dangerous
We want instant wealth and instant success. However, life will never work like this. The longer the time frame for results, the less you need intensity and the more you need consistency.
10 Personal Finance Resolutions 2024 – You MUST act
As I mentioned above, CONSISTENCY wins over MOTIVATION. Hence, follow these simple and realistic resolutions and stick to them.
# Money is not everything in LIFE
The financial industry always forces you to believe that you are a reflection of your money or financial life. It is not like that. You are not a money-generating machine. You are a father, mother, son, daughter, spouse, friend, colleague, well-wisher, and a good human being to society.
Hence, reflect on your personal life, professional life, social life, and then money life. All are important to lead a blissful life. Hence, thinking too much about your finances is a modern viral DISEASE that the finance industry will spread to you. Balancing life is more important.
# Investment is MARATHON but not a SPRINT
Creation of wealth is not an INSTANT NOODLE. It is a marathon with decades of consistent investment and sticking to what you planned. Never be in a mindset that you set a new year resolution today and achieve success in another one year.
Wealth creation is decades of effort to save, invest, and stay. Hence, never adopt the strategies or products that force you to believe that you will be rich instantly. They are TRAP.
# Health is wealth
Never ignore your health when the choice is between health and wealth creation. Life with a lot of wealth but unhealthy is nothing but hell. Hence, concentrate on building certain good healthy habits. You no need to be a bodybuilder. Instead, make sure that your body is active and flexible enough. Avoid sugar, processed food, or some unhealthy habits.
Beware…like the financial industry, the health industry is also filled with a lot of conflicts of interest with a lot of misguidances. Hence, choose the strategy that works for your body, mind, and POCKET. Follow the simple, long-lasting, and cost-effective strategy rather than subscribing to the gym, and lose weight within a few months schemes.
I follow a simple regime of 10,000 steps a day, 30 minutes of Yogasana, 15 minutes of pranayama, zero sugar, 13 hours of intermittent fasting (started with 12 hours and planned to achieve for 14-16 hours), and avoiding all forms of processed and packed food. Drink water as per your body’s requirement rather than the standard rule of 2-3 liters a day. Each one of us is different and hence follow the one which is best suitable to you. Also, I am not a health expert. Hence, don’t follow blindly what I am following. Do your research and adopt the one that is best suitable for you.
# Follow delayed gratification for spending and investing
“Remember that more than 60 percent of what we buy wasn’t on our list.” – Paco Underhill, Why We Buy: The Science of Shopping
We are flooded with discounts, offers, or credit card points. But just hold your breath and think why they are giving the discount by losing their profit margin. Are they offers or traps? The majority of them are traps to achieve their sales target. Never be a scapegoat to such sales tactics. Buy what you NEED and if you feel they are WANTS, then follow the delayed gratification strategy.
The same applies to investment. Take for example, currently, there are around 1400 mutual funds in the Indian Mutual Fund market. These AMCs create a mindset for you that all these 1,400+ funds are NEED for you and without which your wealth creation journey is an end. However, as an investor, you just need less than 5 funds to create your portfolio. Hence, avoid the trap of saying YES to whatever you listen or take advice.
The simple rule to follow whenever someone will offer you a service or product is – Is it a NEED for ME or the person who is offering me? What is the conflict of interest when someone is offering you his service or product to you?
Follow delayed gratification and never invest in NFOs and IPOs. They are achievements for mutual fund companies, middlemen, and the promoter of the companies but not for YOU.
# Avoid a product that has taglines like – GUARANTEED, TAX FREE and SAFEST
Look at how the endowment life insurance products in different faces are sold to investors. Agents and insurance companies usually pitch products with the taglines I have mentioned above. However, the majority of these products are trapped with LIQUIDITY issues and failure to beat the inflation for your long-term goals.
Hence, avoid insurance products as an INVESTMENT consideration. Instead, buy insurance products as risk-transferring products.
# Never subscribe to any courses
Nowadays you will find many experts on social media who are ready to sell their courses with a certain fee. In my view, NONE of them are useful for you. Whatever is required for you to create your wealth is already available for FREE with abundance.
The only task you have to do is to choose the one which is suitable for you. Then adopt the same for decades. Basic investment and wealth creation principles like spending less than what you earn and investing the rest are UNIVERSAL. What matters is how consistently and seriously you act for decades.
Remember…NONE are aware of the future. But the financial industry is filled with PREDICTORS who sometimes were successful and force us to believe that their strategies work BEST. Follow my blog post on basics of portfolio creation “Top 10 Best SIP Mutual Funds To Invest In India In 2024“.
# NONE are here for FREE
Nothing is free on this earth. This applies to the financial industry too. Never be in the wrong notion that if someone is spending a lot of time, energy, and effort without charging you upfront means they are BEST and like GOD. NO…all have certain hidden agendas which sometimes you identify and sometimes you fail to understand.
Hence, stop BLIND following anyone in this financial industry (including me. Because I have an agenda to earn from my blog and to promote my “Fixed Fee-Only Financial Planning Service” whenever I share my knowledge with you all).
Trying to find which advice is GENUINE, CONFLICT FREE, and UNBIASED is your task rather than BLIND FOLLOWING. Doubt every person whom you meet because of your money (either online or offline). Never believe anyone so easily. The financial industry is filled with conflicts of interest.
# Evaluate your basics
Recheck your Life Insurance, Health Insurance, Accidental Insurance, and Emergency Fund status. If there is any shortfall then first concentrate on increasing them. They are like foundations of personal finance. Never build wealth without creating these foundations at first. Otherwise, it may tumble at any point in time.
# Choose products for investment based on RISK analysis rather than RETURN analysis
One of the most powerful bais in choosing an investment product is PAST RETURNS. We all know that past performance is not a guarantee of the future. No bother about why the past performance is so fantastic. Rather we humans strongly believe that past performance will continue in the future too.
The classic example is of recent uptrend in small caps. Refer to my post on this “Who CAN Invest In Small Cap Funds?“.
Nothing is risk-free. The only way forward is to manage the risk. Hence, to be the best investor, the lesson is to manage the risk and avoid mistakes rather than blindly chasing the returns.
# Invest in products where human errors should be the least
Whether you, me, or so-called fund managers, We are all humans and humans are prone to error. Assuming highly knowledgeable will not commit mistakes is a myth. Hence, when we are adopting our investment strategies and products, we must create a portfolio in such a way that there should be the least impact on such human unpredictable errors.
The best example is adopting Index Funds. By adopting Index Funds, you are avoiding the risk of fund managers’ underperformance and also indirectly saving the cost. One more best thing about adopting index funds is your end of searching for the best-performing fund and churning your portfolio frequently.
Do remember that no AMC or middlemen with wholeheartedly promote Index Funds. AMCs offer Index Funds mainly because there is a market for index funds nowadays. They don’t want to run behind other AMCs in the offering. But the real earning for AMCs and middlemen is in offering you active funds.
Conclusion – Just because it is New Year’s Eve, nothing is going to change either in your life or in my life financially. If you are looking for a change, then do it slowly, consistently, and effortlessly with the intention that it must last long but not fade within few months. Any resolution that requires a lot of effort, pain, and sacrifice will not last long. HAPPY NEW YEAR IN ADVANCE TO ALL MY READERS!!
