It’s the turning of the year again, with everyone looking back on what’s been before and looking to what is coming ahead. The first few days of the New Year will be awash with hazy memories of indulgences as we tidy away the remnants of the parties and occasions that prompted them. The last thing that anyone really feels like doing at this time is attending to financial management, but perhaps that’s not a bad thing. This is not traditionally a time for looking after details, so why not carry that through to your financial thoughts and focus on something a little bigger than scratching out your expenses in whatever tool you use?
Most of all, I think this time could be used in reflecting on who you want to be. All that meaning of life stuff, you know. Whether we think so or not, each of us already has a framework for how we understand life and a picture of who we want to be; the question is whether or not we are conscious of it. Steven Covey, in his book 7 Habits of Highly Effective People, calls this habit 2 – beginning with the end in mind (definitely worth a read or a re-read). It’s about more than simply setting a goal and working out how to achieve it, it’s consciously setting a filter in place that will help inform every decision you take in every area of your life and that will help harmonise those decisions to maintain a consistent worldview. Do you believe fundamentally that life is not about yourself, or that it’s actually every man for himself? Do you see yourself as a family person? A supporter of the community? A technical expert who’s going to be the best in their field? Settling these questions provides clarity for everything, and inevitably trickles down into how you decide to run your personal finances.
Though vitally important, I’ve realised the hard way that it’s not enough, of course, to stop at this understanding of myself and how it will shape my actions over the next year. I also need to decide what to do about it.
As far as thinking about what you want to do with your finances is concerned, I’ve been reading David Allen’s book Getting things done (also worth a read) and he has a few ideas which could be useful. Most notably, it might be an idea to think of your finances as a project. If you were to follow Allen’s methodology, this would mean applying five principles to it, in this order: understand and clarify why you want to do it, envisage what a successful outcome would look like, brainstorm ideas of how to do it, organise what your actions are going to be and then, finally, do them. For ideas on fleshing out this framework, this site is full of good ideas and it’s worth a quick browse to find things that will work for you. The beginning of the year is usually the time when we have the most energy and enthusiasm for starting something new, so it’s best to make sure that it’s practical enough for us to want to continue with it through the year.
We seem to be built, as humans, to need to take a break every now and then, so it’s no bad thing to apply this to the humdrum aspects of personal financial management; well utilised, though, it can also help propel us forward. All that really remains to be said is to wish everyone reading this all the very best for 2010. May you be able to look back on it this time next year and realise that circumstances have combined with your well-thought efforts to leave you in a better position than the one you are in now.