Financial Resolutions

We're now into March, which is about the time when I realize that this is not the year that I'm going to finally lose those fifteen pounds, or learn to play guitar, and I'm going to be the same, overweight, non-musical slob I was last year.

Now, maybe you're one of those annoying people who "betters themselves" and "uses an accountability partner" and "doesn't eat four doughnuts for breakfast" which, if so, good for you. I am not one of those people. Still, I set goals each and every year, even if all past evidence points to me falling short again.

I'm no different with setting financial resolutions. If I want to actually retire by forty, then I'm going to need to invest crazy sums of money, every month, for the next four years. I re-evaluate in January, set new net worth and investment targets, as if it's all in my control. Still, a lot of months I slip up and if I don't course correct, I know what that means for that really, really big resolution in 2021.

We have a lot of other financial goals for 2017, too. As we're hoping to bring another person into our family in 2018, we want to pad our emergency fund now. We'll sleep better at night knowing we have a bit more cash in the account. And as babies apparently cost money, what constitutes three to six months of our expenses might simply be a larger amount than it was for just Mrs. Done by Forty and me.

As you know, we want to buy a new home this year, too. (More to come on this on a future post.) And that means putting down an obscene amount of cash for a 20% down-payment, forking over another few thousand for transaction costs, paying for new appliances, and some new furniture, just for good measure. That's a lot of cash to stack up, complete with massive opportunity costs.

That also means we'll be selling our current house, and all the fun DIY home repair that entails. It's funny how many things that need to be repaired show up when you're trying to sell the place. That paint that didn't seem so bad for all those years now isn't quite right for a buyer. Cracks in the grout start to show. Those fixtures seem a little dated, and has that back fence needed mending all this time? Little things here, a few big things there, and suddenly we have thousands of repairs to complete before we even list the house.

All of these financial resolutions for the year seem fine on their own. But, unfortunately, each goal kind of cannibalizes the other. If we want to save a few hundred dollars for a down-payment, that money can't be used for repairs, or for appliances, or for padding the emergency fund for some non-existent, pricey baby. Back when we were paying off our student loans and personal loans, we couldn't use that same money to invest for retirement. I suppose it's the same with any goal: you usually have to prioritize, and choose between something that's good and another thing that's a bit better.

The setting of goals in January is easy compared to the inevitable prioritization that follows throughout the year. If you're someone with the means, who has the time, money, and determination to follow through on all the things you set out to do, then good for you. But I've found that, when time or money or will power prove to be a bit scarce, then the silver lining of having to choose is that I get to figure out what's really important to us. Like Paula Pant says: you can afford anything, just not everything.

For us, it turns out the goal that really mattered to us was a new house. We stopped investing for a couple months to make sure we had enough for the down payment, and to put a couple new appliances in. We'd have loved to have enough money to keep investing all the while, and to keep on schedule to retire by forty.

But I've come to find that maybe reaching financial independence, or at least reaching it by a date I picked back in 2012, isn't quite as important as I'd initially thought. That's the best part of goal setting, at least for me. We draw up achievements we think we want for ourselves, and then as reality sets in throughout the year, we get to find out how important those goals really were. At their best, these resolutions help refine what we think is important.

And at their worst, they just make me feel bad about eating all those doughnuts.

All the best in achieving what you set out for in the rest of 2017.


*Photo is from rayb777 at Flickr Creative Commons.