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Lee Wapling
Lee Wapling



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Why New Year's resolutions can sabotage your financial success

The ‘January effect’ is a well-known phenomenon among economists and psychologists alike. Regardless of market realities, consumer optimism and share prices often see a temporary boost and so does our perception of our ability to achieve our financial goals. People at barbecues will tell you, beer in hand, "This year we’re going to get serious about saving for that big overseas trip, be more proactive about our Super, and we’re looking into to buying an investment property."

Sound familiar? The January effect. As we return to work or routine in the new year we bring the optimism that comes from rest, rejuvenation and time to talk or reflect. There's a sense of ‘a clean slate’ and we’re motivated to pursue self-improvement and long-term goals. The window of opportunity for change is small but priceless, if we can harness it.

And there’s the rub. Most of us don’t.

Paradoxically, it’s that same sense of 'anything is possible' during a relaxing summer that can sabotage our long-term financial success. Why? Because the feel-good factor makes us overestimate our capabilities, play-down barriers to success, and less likely to ask for help. We daydream about the future we want but we don’t necessarily make a concrete plan to get there. In fact, people often abandon their financial resolutions after a few months because they don’t have support to help them stay on track and they can’t see tangible progress.

In her book The Will Power Instinct: Self-Control, Why It matters and What you can do to get more of it, psychologist Kelly McGonigal talks about ‘lemmings’ who fail because they focus on false optimism and ‘trackers’ who focus on incremental outcomes. Trackers, it seems, are willing to invest and give up some control to get more self-control in the long run by outsourcing the important things they want to change but can’t do alone – a personal trainer for fitness, home delivered meals for healthy eating and a qualified financial adviser to achieve their lifestyle goals.

If you’ve noticed your good financial intentions falling by the wayside before, you already know going it alone isn’t for you. Forget transient financial resolutions in 2019. Instead choose long-term success and get good some professional advice to help you get there.

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