Gaining wealth is like losing weight
THE most popular New Year's resolutions are to lose weight and gain wealth - the same principles apply to each.
Rule 1. You must have a concrete goal. It is as pointless to say "I want to lose a few kilos" as it is to say "I want to have more money in the bank". You need a specific goal and a timeframe.
Rule 2. Focus on the benefits to help you stay on track. Shedding a few kilos will improve your health and make you feel better; retiring with a substantial superannuation balance will open up a whole new world of choice.
Rule 3. It must be a permanent change . Most people who go on a diet put all the lost weight back on when the diet becomes too hard. Scrimping and saving for a month is pointless - becoming wealthy is usually the result of a process of managing your money well over the long haul.
Rule 4. Understand the 70/30 rule. Seventy per cent of a successful weight loss program will be attributable to your eating habits, and thirty per cent to exercise. Seventy per cent of building wealth consists of managing your money to spend less than you earn.
Rule 5. Don't try to do too much too soon. The trick is to start small and build on it. To lose weight you might decide to have two healthy eating days a week. To get your finances in order you could start with a simple budget coupled with moving your home repayments from monthly to fortnightly.
The great thing about having a variety of goals is the way you can make them work together. Let's face it, most of our discretionary spending these days is on food and alcohol, and cutting back on these will save you dollars as well as kilos. It may be difficult at first while you are slowly changing lifelong habits but eventually new habits will form. Then you can enjoy the results.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: email@example.com.
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