The myth
The start of the year is when many New Year’s resolutions, like spending more time with family or getting fit, are set. The main idea is to have an entire year to start a good habit, end a bad one, or achieve a certain goal.
Some people recommend using this time to set your financial goals as well. Examples of this include becoming debt-free, building an emergency fund, or starting an investment.
Why do people believe it?
New Year’s Eve is a symbolic time for leaving things in the past and moving towards a better future. This is a good way to set the tone for the year, and can also guide your plans for the months ahead.
Aside from being a traditional practice, setting financial goals in January can actually be effective. Doing this gives clear start and end points, and allows you to track your progress easily against the remaining number of days. It also provides the maximum amount of time for you to reach your goals, increasing your chances of success.
Risks of believing this myth
If you believe that financial goals should be set only at the start of the year, things could get complicated if your situation changes. For example, if your earning power goes up or down, or if you suddenly have a major expense to cover.
If this happens, chasing your original goal may not be the right thing to do. You should be able to adapt to the circumstances as they occur; waiting until the next year might make you dip into your emergency fund or savings to cope.
Also, when it comes to financial goals, when you start isn’t always as important as the steps you take to achieve them. Remember, consistency can trump timing, especially in the long term.
Building an emergency fund? Saving every month is more important than when you started saving. Investing? If you invest a little at a time, you’re improving your chances of earning through peso-cost averaging.
Verdict: It depends.
January may be a good time to set a financial goal but you should do it any time it is necessary.
When you’re chasing a goal, being flexible is as important as when you begin. This way, you can react quickly to a sudden situation. Consistency also helps a lot. Even if you start a goal later in the year, being regular with your savings or better with money management might allow you to still reach it.
