Maybe I’m an optimist… or just a sucker for tradition… but I’m a fan of the New Year’s resolution.
It’s motivating to start fresh and set goals, even if we don’t meet most of them.
The problem is that most people don’t do them right. To be effective, a resolution (or any goal for that matter) needs two specific characteristics:
- You can achieve it.
- You can measure your progress.
I can resolve to be richer than Jeff Bezos by December 31. But we both know that’s absurd. I might as well resolve to grow wings and fly.
Likewise, I can resolve to “lose weight” or “lower my cholesterol.” But how do I measure success there? A more effective resolution would be to “lose 10 pounds” or “reduce my cholesterol by 10 points.” These are specific benchmarks to reach, specific numbers to work toward.
So, with that as background, let’s set some New Year’s resolutions in both investing and life for 2022.
Tips for Your New Year’s Resolutions
Be a Better Investor
Do not resolve to be a better investor this year. That’s too vague and too subjective. In any event, a single year’s worth of trading isn’t enough to measure success. Instead, here are some better suggestions to get you there:
- I resolve to read at least one investment book per month.
- I resolve to read Money & Markets — or even better, Green Zone Fortunes! — at least once per week.
- I resolve to keep an investment journal that records my rationale for each investment I make and my expectations going in.
You can’t control whether the market plays ball and rewards you this year. But you can improve your process and discipline with specific and measurable goals.
Save More Money
If you resolve to “save more money,” I swear I will track you down and slap you. Attach some numbers to measure against and strive toward. Something like this:
- I resolve to max out my 401(k) at $20,500 for the year. This means contributing $1,708 every month from now until the end of December.
- I resolve to reduce my outstanding mortgage principal by an additional $10,000 beyond my regular payments.
- I resolve to contribute $500 per month to my children’s college fund.
These numbers may be out of reach for you. Or they may be too easy to reach, and you should push yourself harder. That’s up to you.
Just make sure whatever goals you set here are achievable and measurable.
Be a Better Person
Not everything is about money, even for a cold-hearted capitalist like me. But even here, you have to be careful how you word your resolutions.
“I resolve to spend less time playing on my smartphone.”
How much is “less?” Be specific. Resolve to only spend one hour per day (or pick a number that works).
“I resolve to spend more time with my kids.”
Same thing — pick a number. One hour per day, six days per week? More on the weekend? Pick a number that might be a stretch but that, with a little discipline, you can meet. And then measure your progress.
“I resolve to be nicer to people.”
That’s way too subjective. Instead, resolve to give a certain dollar amount to charity or contribute a certain number of volunteer hours to a local organization.
You might have figured out that these are my resolutions this year. And yes, I plan to measure them. I hope you do the same.
Best of luck in 2022. Let’s make it our best year yet!
To safe profits,
Co-Editor, Green Zone Fortunes
P.S. Maybe you have a resolution to read one new investing resource weekly. Why not make that resource Green Zone Fortunes? Along with Adam O’Dell’s highest-conviction stock recommendations every month, you’ll also receive weekly insights concerning our model portfolio, delivered right to your inbox! To find out how you can sign up today, click here.
Charles Sizemore is the co-editor of Green Zone Fortunes and specializes in income and retirement topics. He is also a frequent guest on CNBC, Bloomberg and Fox Business.