How did 2020 treat you? Bad question. 2020 was interesting for all of us, even when we were able to find silver linings. If your resolutions stayed on track through March, there’s a pretty good chance they didn’t make it past then.
You may have lost a job or had other financial changes. Although we don’t always have control over when pandemics decide to show up or getting laid off, we have plenty of room within our own financial lives to align our money with our priorities.
As you flip the dial on another year around the sun and you start contemplating New Year’s resolutions for 2021, I don’t want you to forget about 2020 just yet.
I took an idea from my friend, Tim Ferriss. He talks about reviewing your past year in a way that informs your plan for this one. Not rocket science, right? Allow yourself some space to review before jumping straight to new ways.
You might be getting anxious and ready to just wipe 2020 out of your brain, but there’s plenty that can be learned from this hopeful once-in-a-lifetime experience.
Year in Review
Doing a review of your finances can be a bit scary. You get that dose of reality and sometimes a harsh one. You don’t want to feel guilty about that extra takeout you got or the new things you bought (that you maybe didn’t really absolutely need).
The great thing is the point of this activity isn’t to dwell on the past. It’s gone, it’s not here, it’s ok. The goal is to use that knowledge to put yourself in a better spot moving forward.
We’re Humans Not Robots
What I always find interesting about these reviews is how our biases are woven into our perception of spending. You may have a tendency to not think twice about those Amazon purchases, but get all hot and bothered when you receive late fees you weren’t expecting.
We’re humans. We feel things differently than what might actually be occurring. This is why spending a little time looking at the numbers is vital, because unfortunately, your bank accounts don’t care about your feelings.
There are a few different aspects of your finances worth review at the beginning of the year, but right now, I want you to focus on your expenses. You might have different ways to consolidate your expenses, whether it’s through your online bank websites or through a money tool like Mint. Pick whichever one works for you. Yeah, I’m the excel nerd that pours their numbers into a spreadsheet – I can’t help myself.
Get to Work
Look at your expenses on a weekly or monthly basis to review how those things served you. Write down which ones you really enjoyed and which ones didn’t add much to your experience. Some of this is going to suck, it’s all part of the process.
Confession – When I did this activity, I found that I spent $80 a month at liquor stores in 2020. Don’t judge – it wasn’t all just for me, but most of it was. As much as I love the ritual of a couple of beers while making dinner, I don’t think it was necessarily serving me all that well.
With all the time at home, our habits changed. Some for the better and some were challenging. The goal is to determine what made you feel great and added to your life experience and which things you want to modify heading into this year.
I’ll Go First
Good Food
Last year, with spending more time at home, my family and I spent even more time in the kitchen. I’ve never been in a house that cooks food like this. It’s pretty awesome. We make a lot from scratch and it’s just as good as eating out (on most things) for us.
Family Trip
We also took a family trip to Moab right before the world turned upside down. We love going to National Parks and these are experiences we want to keep doing. Even in a still challenging state of the world, we’ll prioritize another trip this year.
Golf
I also regained my passion for golf this year, as many others in Colorado joined me. I grew up an athlete and getting back into the game not only gave me a lot of time outside but also fed into the competitive part of me.
Biking
To round out the good, I bought a mountain bike for the first time last year which got me outside even more. Even though it was an expensive purchase, those dollars are well worth the benefit and experience.
Review
I mentioned above how I felt about the booze so it’s no surprise it ended up on my list. It’s always been a hot and cold relationship. Love the ritual of it and the social aspect, but paying for the lack of good sleep and focus on the following days is difficult to accept.
We also love going out to our favorite spots and dining out is one of my favorite experiences. At the moment, we’re trying to keep our costs to a minimum and this is one that can be curbed. With our style of cooking, it can be easy to take nights off and dine out, but putting in a little extra effort can add money to your wallet and keep you more healthy as well.
It’s Your Turn
Now it’s your turn. Take those activities (or things) on the left column and work them into your budget and priorities for 2021. You know what to do with the right side. You don’t have to cut it out completely, but maybe you dial it back a little bit.
The B-Word
Yes, I did just say the word ‘Budget?’ If you’ve tried budgeting in the past and failed, welcome to the club. Another way to think about this is to call it a ‘Spending Plan.’ Aligning your money with your priorities. I break down an easy way to get started that all of you can grasp.
Now don’t get me wrong, if you really enjoyed your $2,000 vacation somewhere and you aren’t rolling in dough, you can’t go nuts booking a trip every month. It is something I would highly prioritize, though.
30 Day Check
Coming up with a plan at a desk and expecting it to hold up for a full year is like expecting Adam Sandler to win an Oscar. Not likely to happen. That being said, looking at these yearly goals in smaller chunks lets you manage a little at a time.
Think about sticking to your plan for 30 days. You know, like the Whole30, but for money. Do everything you can to stick with your newly-minted plan and check back in with yourself after that time.
You’ll probably have to tweak things and that’s ok. The goal here is to have that dedicated focus to stick with something for 30 days. If you can do it for 30 days, it has the potential to be a long-lasting change.
Parting Words
Taking part in these types of activities can feel uncomfortable. That’s actually the best part. The things have already happened, we can’t change that. The best part is now you have a greater awareness that allows you to make better choices for yourself (and those around you) moving forward.
