by Henry Choo Chong
My New Year’s resolution is to save up for a new house; get rich; get in shape; help the less privileged; buy low and sell high; quit smoking; travel more; win the lottery! How many times have we heard these words uttered?
As you sit at the dining-room table with pen to paper, sipping coffee with the fireplace crackling in the background, pause for a moment before making that New Year’s resolution list and glance at the crumpled, faded list from last year. How many of your resolutions were actually accomplished? If you are like lots of other Canadians, then not many.
The new year is the time for us to put 2013 behind us and reboot for another year. It’s a great starting point to forget the old and embrace the new. It’s a time to pause and look at what has been accomplished and what still needs to be done.
No one is successful without goals and objectives that can be measured. Although, my accounting and tax background do not give me the expertise to help you lose weight or quit smoking, the approach to financial resolutions may not be much different. The old adage, “Life is what you make of it,” applies to accounting, sports, business and family goals alike.
Set realistic resolutions. “I want to look like I did as a teenager” is unlikely, unless you are one!
Don’t just say, do. Resolutions can’t be accomplished without action and following through. Stop talking about joining a health club, and do it. Regardless of what some so-called experts say, you can’t lose weight by sitting in front of your computer (although the eyes and fingers may get a good workout).
Having a plan and its execution is as important as the resolution itself. Without a plan, there will be no success. “This year, I would like to save for a home.” This is a great resolution, however how will you achieve this? How much will you need? Where will the savings come from? How and where will you obtain financing? Step one is to create a cash-flow budget. Identify how you can increase income and where you can cut expenses.
Set long-term goals, but make them achievable objectives that can be measured periodically. For example:
a: If you would like to lose 20 lbs. this year, set a weight-loss goal of three pounds per month.
b: If you would like to start an RRSP, contribute $X by the end of the year. This will be achieved by setting up an automatic payment plan with your financial institution. Pre-authorize monthly RRSP contributions.
Goals cannot be reached, unless you reach for them!
Henry Choo Chong, CGA, sits on many committees and provides accounting and tax services to individuals and businesses in the GTA. He can be reached at 416.485.5225. Questions to Taxing Issues can be emailed to email@example.com.