Setting Financial Intentions for the New Year

It’s resolution season. The time of year in which we make promises to ourselves to address all the ‘shoulds’ in our lives...which is the main reason resolutions rarely stick. Over the past few years, you’ve likely observed the trend of setting intentions instead of resolutions. Unlike resolutions, intentions involve the act of you thinking more deeply about what you want your life to look like in the future. After writing out your intentions and saying them out loud, you’ve begun the process of living into a future reality where your intentions have become your reality.  In a recent blog post we discussed how some of the most successful people in the world continually set intentions for themselves, both personally and professionally. 

We encourage all of our clients to set financial intentions at the beginning of each year because, without knowing where you want to go, it’s impossible to celebrate how far you’ve come. 

This blog post is about how to stop should-ing yourself and how to instead cultivate intentionality in how you live into 2020.

So how do you start?

Instead of saying: “ I should make more money in 2020”...

Define your ‘enough’ in 2020

You’ve heard this stat from us before: 52% of Americans have admitted they’ve cried because they didn’t feel like they had enough money. And, unfortunately, 41% of Americans who make over $200,000 say they’ve broken down at some point because they felt like they were coming up short. For many Americans, the pressure to have ‘enough’ is a real, sustained pressure they feel. As financial life planners, it’s our job to show you that your enough is entirely within your control. The trick to finding your enough for 2020 is to get specific about what that means to you. Making more money can get you closer to your enough, but conversations with just about everyone we know have demonstrated that making more is typically followed closely behind buying a new car, a new house, a lavish trip, etc. 

Setting financial intentions beyond just ‘making more’ adds the detail your brain needs to connect thought to action. Here are some financial intentions worth considering...

FINANCIAL INTENTION #1: INCREASE INVESTING CONFIDENCE EACH MONTH

We meet so many people - both men and women - who haven’t invested because they lack confidence. When people lack confidence in investing, they sit on the sidelines - which means that they choose to stay in the safety of a checking or savings account rather than take the risks they know little about. Women have historically had less confidence in investing than men - keeping 71% of their money in cash versus men who’ve held 60%. Ellevest, an investing platform for women, calculated that this investing gap over a 35-year career span could equate to a gap of more than $1 million.  

One way to increase your investing confidence in 2020 is to set an intention to learn a bit more about investing each month. If you’re an online learner, you can subscribe to an online newsletter like The Morning Brew that delivers daily financial news to you in a super digestible format. If you’d rather turn the physical pages of a book, you can set an intention to tackle one book about investing every month (or two).  When it comes to investing, even a little bit of knowledge can boost your confidence. Set the intention, write it down, and revisit the intention as often as you need it. 

FINANCIAL INTENTION #2: SAVE WITH A PURPOSE

We each have the power to have anything we want in life, we just can’t have everything. In Mana’s financial life design process we dedicate time each year to uncover our client’s highest priorities for the next two years of their life. Once we know what’s most important to them, we encourage them to keep that vision burning bright by printing out this vision and reading it daily...until they believe it. Believing that something will happen is how manifestations take root. You can’t lose twenty pounds overnight, but you can begin to move more and eat healthier everyday. Saving for goals works the same way. You may not have the cash on hand to take a year off and live abroad, but you can have it sooner than you think if you prioritize it over spending it on things that aren’t as important to you. 

If you don’t know what you’re saving for, it’s going to be tough to trick your brain into feeling good about the tradeoffs you are making. Before the year begins, set aside time to think about the top three savings goals you have. Do you want to make monthly contributions to your Adventure Fund so you know the money will be there when you’re ready to take a trip? Is your dream to put a 20% down payment on a new house? Is it important to save for your children’s college education? Whatever your goals, write them down. Next to it, write how much you’ll need and when you’ll need it. Divide the total by how many months you have to get there and then automate your monthly savings number a day or two after you get paid so that you will never notice it hit your bank account. 

FINANCIAL INTENTION #3: KEEP IT SIMPLE, FOCUS ON YOUR NET WORTH

Look at your numbers and set an intention for your net worth at the end of 2020. Your net worth is a really simple, easy way to track your wealth over time. To calculate your net worth, you sum up all that own (your assets) and subtract it by all that you owe (your liabilities) - the difference is your net worth. If you use a financial account aggregator like Mint.com or Personal Capital, the software will calculate your net worth for you. You can increase your net worth by saving more, paying down debt, and growing your investment assets. Ideally, it’s a combination of all three. Are you expecting a raise this year? Will you be receiving more equity compensation? Are you planning on launching your own business? Are you buying a new house or car? All of these life events are examples of inputs that will affect your net worth. With the future in mind, setting an intention for your net worth can help you stay on track. 

This sounds great. How can I learn to recognize my best intentions and set new, meaningful goals?

Hopefully the intentions we proposed above sound good to you (we think they are some of the best goals that any person can try to connect to in 2020). So how should you actually go about setting them in an achievable way? It’s not enough to just declare that you will “save more”, “invest with confidence”, or “keep it simple”. We’ve covered some of the most relatable aspects of each intention, but each reader’s situation will be different. In order to set actionable, realistic intentions, we recommend that you take three moments of pause during the holidays to connect with your present self, your future self, and recognize what you value. Connection with your future self has been shown to be one of the most powerful indicators of financial success and savings abilities in scientific decision making research. Year-end reflections are a perfect way to start doing this. Here are three Mana Moments that we recommend you engage with during the holiday season:

MOMENT #1: YOUR PRESENT SELF

What makes you proud to be you today? What’s the best part of your present identity? If these questions feel too big to ask yourself, you can start by choosing one big achievement from the past year to celebrate. We don’t necessarily mean you should throw yourself a party (although you totally could), we instead recommend that you find a moment before the new year to pause and mentally recognize your own success. As you do this, think about how your financial life is related to this success. Maybe your proudest moments were extra time spent with your children, which you planned vacation days for at work. Maybe you’re proud of something you achieved at work, or a charitable contribution. Whatever it is, make sure you acknowledge it.

MOMENT #2: YOUR FUTURE SELF

Envision yourself at the same time next year, then at the same time in 5 years. What feels different? What feels the same? Take a pause to visualize your future, and to imagine what you and your family might accomplish. Connect this idea with your present successes. How are they related? Will the vacation time spent with your kids make your family bond stronger? Does your work ethic lead you to a raise? You can start with just one concrete connection, and even consider writing it down somewhere. This practice can strengthen your ability to believe in and value your future. Pay attention to what your long term goals are, and see if they align with your present actions and identity. The more clearly you can relate your present and future, the easier it is to plan and achieve.

MOMENT 3: YOUR PERSONAL VALUES

After reflecting on your present and future success, hopefully you will have a good idea about what you value in life. Maybe your values are what drive your accomplishments in the first place? Maybe your accomplishments are pushing you closer to aligning your lifestyle with those values? Either way, intentionally acknowledging how they are connected is important. 

Once you’ve finished these personal celebrations and reflections, think about concrete ways to continue living your best life in the new year. Set your financial intentions around your personal values, and make sure they are supporting the future identity you want to hold. Finally, don’t be afraid to share these personal goals and intentions with your financial advisor! Set your best intentions for 2020 to live the life you deserve.

Cristina Livadary is a fee-only financial planner based in Los Angeles, California and is the CEO of Mana Financial Life Design. Mana Financial Life Design provides comprehensive financial planning and investment management services to help clients organize, grow and protect their wealth throughout life’s journey. Mana specializes in advising professionals in the tech industry, as well as women who work in institutional investing, through financial planning and investment management. As a fee-only fiduciary and independent financial advisor, Cristina never receives commission of any kind. She is legally bound by her certification to provide unbiased and trustworthy financial advice.