On Sunday, October 26th, USA Today reported findings from a recent Bank of America Merrill Edge survey of 1,046 people considered “emerging affluent”. Emerging affluent means respondents, contingent on age, had investable assets between $20,000 and $250,000. The survey highlighted that one-third of respondents felt guilty for not investing money more in 2014, considering the stock market’s high flying performance. What interests us more, is the following data:
• 51 percent of respondents did not save for retirement at all in 2014
• 59 percent plan to save for retirement in 2015
• 51 percent plant to pay down debt in 2015
• 41 percent plan to lose weight in 2015
Come the end of every year, Americans look back on their successes and mistakes and are motivated to make improvements for the future. Past mistakes of paying off debt, saving for retirement and losing weight are such common New Year’s resolutions they’ve become cliché.
With Halloween behind us, we’ve essentially entered the 2014 holiday season. This inevitably brings holiday meals and gift giving, all of which increases financial mistakes such as money outflow and increases our caloric inflow. This leads to proverbial resolutions on January 2nd.
• How much debt do you plan to pay off in 2015?
• How much money do you plan to save in 2015?
• How much weight do you plan to lose in 2015?
• What can you do differently in 2015 to better succeed at your goals than you did in 2014?
Albert Einstein said that the definition of insanity is to do the same thing over and over again and expect different results. If you consider your previous New Year’s resolutions, if you’ve written them down even better, do you see common themes? Does some version of better managing your finances show up each year? Is some version of getting into better physical shape on your previous New Year’s resolutions?
If they do, don’t consider them mistakes or failures. Failures only exist if you don’t learn anything from your experience. If you have consistent themes with your New Year’s resolutions, consider why this is so.
• What were you previous resolutions?
• What were you previous plans to achieve them?
• Why did you not succeed with them?
• Where did the breakdown occur?
If you perform an honest and thorough analysis of your past resolutions, you can better plan for better future resolutions. If you’re able to pinpoint where the mistakes with previous resolutions were, you can make the appropriate changes to your 2015 resolutions and position yourself for success.
This kind of analysis is performed in business all of the time. Businesses are typically running several projects at once. All projects or all aspects of a project aren’t always 100 percent successful. Consider Coca Cola’s New Coke, Netflix’s Qwikster and Coors Rocky Mountain Spring Water. These were public mistakes that didn’t define these companies. These companies learned from the mistakes of these failures and created better future products and services.
The same methodology can help you with your personal goals, such as paying off debt, saving for retirement and losing weight. That way, when Bank of America Merrill Edge asks you how successful you were in 2015, you can respond with a decisive “very successful”.