New Year’s Resolutions
Our tendency as we become wealthier is for those things which were once luxuries to become necessities, says Peter Ellen.
January 13, 2013 8:44 by kippreport
It’s that time of year when many of us sit and think about last year with a view to doing better in the next one. I should lose a couple of kilos; I should give up smoking; I should go without a drink for a month. Most of these resolutions don’t last until the end of the New Year holiday; some get a brief airing; almost none become habits that do us some good.
Why is this?
I think it’s because we fail to make a connection between the good intentions we form and our value set – the unquestioned feelings that tell us the difference between what’s right or wrong for us – not in general, but specifically for us. Our values tend to have long-term implications, and we are pre-programmed to seek short-term (even instant) gratification – so it’s a constant fight between deferred gratification gained by doing the right thing, and instant gratification by doing the easy thing.
One such area of our lives where this is particularly relevant is saving. Many people have sizeable (and often long-term) aspirations – to buy a house, to ensure their children get the best education, to pay for their children’s wedding, to help their children buy a house, to be free of debt, to save enough money to be able to stop working at some point before they die and to live in relative (even modest would do) comfort for the remainder of their lives.
But, saving is also one of those things that can always be put off for another day. There is always something more important today – whether it be dining out, buying a new car or that new dress, or something more trivial. Our tendency, as we become wealthier – and here in Dubai, people are becoming wealthier – is for those things which once were luxuries to become necessities. In other words, our expenses increase to meet the level of our income.
To combat this tendency, we have to re-evaluate and reprioritise our goals and the events in our life that we want to make happen if we are truly going to live our lives according to our values. Not only this, but we also have to reverse the way we think about spending and saving. First and foremost, we have to save what is required to meet the financial demands associated with our goals; then we have to discipline ourselves to live within what remains. The reality is that most people think about their expenditures the other way round – saving only what is left over once they have met their current needs. And, often this is nothing – and sometimes this is a negative balance – meaning many of us live with debt instead of wealth.
To do this is not easy. It goes against the instant gratification programme we are born with. But, being able to defer gratification is one of the main things that make us different from other animals – our ability to plan and to execute that plan over an extended period. We are capable of taking action when we cannot see the actual end result right in front of us. We can think conceptually – about old age, for example. We have a view of our mortality.
So, make saving one of your New Year’s resolutions. Link it to the important life and financial goals you have for yourself, so that you can continue to save through thick and thin. If possible, share your goals with someone else, so that your commitment level is not something you can just walk away from. Consult a financial adviser, who can be an objective and sympathetic third party, and who can review your plans and progress with you. And, most importantly, do it now.
Peter Ellen is Operations Director at Nexus Insurance Brokers www.nexusadvice.com and has extensive experience in the area of sales management and leadership, sales and sales management development and operations management. He has worked in the industry for 28 years in senior management positions and as a consultant, working with regulators, product providers and distributors. To contact Peter for advice with any insurance and investment advice please email him at [email protected]