Bogdan Maioreanu, eToro: New Year resolutions – easy to make, hard to keep

New Year’s resolutions are becoming a habit for many people but statistics are showing that the promises made at the beginning of the year are very hard to keep. While the most popular resolution is to exercise more, many vow to work on having better finances.

A recent study by Forbes sees that 48% of the Americans are looking to better fitness in 2024, followed by 38% that are looking at ways to improve their finances and 36% that look for better mental health. Losing weight and improving diet are the next new year resolutions for over 32% of the Americans.  The study also found that most respondents (46%) are setting 3 resolutions, 20% are setting  two and 14%, four resolutions. This is why few resolutions with some good planning can go a long way.  Regardless of the resolution, reaching your goals requires discipline both in fitness and finances.

If one is looking to improve their finances for 2024 there are some steps that experts are recommending to follow.  First, create a budget. Committing to a saving and investing program during your working years is generally the best way to boost your net worth and help achieve many of life’s most important goals. At the beginning of each year look into the future and plan for the high ticket items to come. Money for the kid’s university tuition, a new car or even a house are things to carefully plan.

When looking ahead, it is important to also plan for emergencies. Recent years showed us how unexpected expenses out of our control can come out of nowhere. Inflation, high bills for electricity and heat impacted families budgets worldwide. It is important to have the necessary cash to survive a period of hardship. Start saving until you have at least 3 to 6 months of expenses put aside.

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Manage your debt. As debt is a tool and how you use it makes it good or bad, it is important to keep it under control. There is a difference between how much you can borrow and how much you should borrow. Keep an eye on how you can repay the debt and make sure that you have the means to do it. Also see if accelerated repayment can save you a lot of money in interest.

Last but not least, start investing. After having your house finances in order, look toward the future and create an investment plan. But first try to understand what your risk appetite is.  After this, having a plan  will help you stay disciplined in your investments. Find a reputable broker or investment platform. Follow your plan and adjust it as needed. Be disciplined and try to learn as much as possible about the investment instruments that can take you toward your goal. Create the habit of investing.

Historians are considering that the Babylonians were the first  to make New Year’s resolutions, some 4,000 years ago. A similar practice occurred in ancient Rome, after the reform-minded emperor Julius Caesar tinkered with the calendar and established January 1 as the beginning of the new year circa 46 B.C. For early Christians, the first day of the new year became the traditional occasion for thinking about one’s past mistakes and resolving to do and be better in the future. But current practice of the New Year’s Resolutions is mostly secular, people making promises to themselves now and this may be a reason for how hard it is to follow them the whole year.

Unfortunately, resolutions are easier to make than fulfil. They tend to have a short life, with 51% of them not surviving past the first three months and only 6% of the people making New Year’s resolutions manage to keep them, according to the Forbes survey. But while we may fail at them to some degree year after year (and perhaps the champagne bubbles make us too ambitious on January 1st), these resolutions are still useful as they help us focus on our top priorities and plan for the future.

About the author

Bogdan Maioreanu, eToro analyst and markets commentator, has over 20 years of experience in financial services and investments and a strong background in journalism. He held different Corporate Banking management positions in both Raiffeisen Bank and OTP Bank, before moving to business consultancy roles working for IBM Romania among others. Bogdan is an Executive MBA from Asebuss and Washington University.