How to not fail at your New Year's resolutions (again)

It’s the time of the year – every turn of a corner is a reminder of New Year’s resolutions. For some, it’s a moment of pride and a well-deserved pat on the back. For others, it’s a sigh of frustration at unmet goals. And there are those whose resolutions have already faded from memory altogether.

Reframing New Year's resolutions

At some point in your life, you would have made a resolution about finances: save more, spend less, get rich, or extend beyond yourself, to give your family a better life. 

If you have found yourself giving up on making resolutions, here’s something about financial goals: they usually stretch over decades, and more often than not, they will evolve over time. The yearly affair of making New Year’s resolutions should be part of a bigger financial plan, broken down into simpler, achievable steps and milestones.

Putting behind the personal goals that have yet to see the light of the day, here’s how you can get on a fresh start for the new year.

Financial goals, achieved the SMART way

You may have heard of the SMART framework for personal goal setting, which stands for: specific, measurable, achievable, relevant and time-bound. 

This framework breaks down your goals into smaller milestones, turning something that people often perceive to be complex into simpler steps. 

Here’s how someone who sets a goal to accumulate 500,000 HKD in the next 5 years can break it down further:

• Specific: I want to save and invest enough to reach 500,000 HKD by the age of 30.
• Measurable: I will regularly review my finances to ensure I am on track to my goal.
• Achievable: In 2025, I can probably realistically save 7,500 HKD a month, which adds up to 90,000 in a year. To make up for the shortfall, I will have to invest my savings to compound at about 5.5% interest per annum, at a suitable risk level.
• Relevant: 500,000 HKD is my goal because I want to be ready for my first home purchase, not because everybody else seems to be getting their first 500,000 HKD at age 30.
• Time-bound: Within these 5 years, I will consistently invest and not withdraw the funds for non-essential purchases.

You can view each New Year’s resolution as a step towards your long-term financial goals, rather than a yearly affair of creating new goals in replacement of old ones that you couldn’t fulfil. Being reflective about what has worked or hasn’t is also helpful to making SMART(er) financial goals.

To give you a little boost on that front, we have compiled our most popular articles to help you succeed at your New Year’s resolution, be it saving more, investing better or retiring well. 

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"I want to save more money"

Good saving habits form the foundation of your financial health. While the popular 50/30/20 method—allocating 50% of your income to needs, 30% to wants, and 20% to savings—offers a general guideline, it's important to tailor your approach based on your personal income and financial goals. 

For instance, saving 30% might be challenging for those with lower incomes. Additionally, as your income increases, it might be wise to consider directing a larger portion toward investments rather than just savings to maximise growth potential. The key is to develop a saving strategy that suits your unique circumstances and needs rather than strictly adhering to one-size-fits-all advice.

Find out how to design your own savings plan here.

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"I want to start investing"

Starting out as a beginner investor can be exciting or scary, and too much excitement or fear can lead one to take more risk than they should, or on the other end of the spectrum, lead to inaction. 

Establishing a strong foundation for your investing journey can shape it into a rewarding one, also minimising costly mistakes in the process. 

Investing begins with setting clear financial goals and subsequently developing a sound investment plan with consideration for your current financial circumstances, risk tolerance, time horizon and not forgetting your goals.

During the process, learn from the wisdom of investing giants like Warren Buffett and Jack Bogle who expounded time-tested philosophies. These include long-term investing, diversification and the importance of emotional intelligence – ones that we, at Endowus, do not stray away from. Just like investing, knowledge compounds. 

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"I want to build multiple sources of income"

News about a spate of layoffs is disheartening, now even happening among employees in their 20s. The job market's volatility has underscored the importance of passive income as a buffer against unexpected financial disruptions. 

Passive income may be generated through investing in investment products like dividend stocks, or unit trusts with a key investment objective of generating income (such as Endowus IncomeUp Portfolios).

Although not the same things, passive income generation can be done through a passive investing strategy. Simply described, passive investing involves putting your money into investments that require minimal effort to manage and maintain, allowing you to earn income without active involvement (such as picking stocks or trying to time markets). 

Learn more about developing passive income sources through investing.

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"I want to give my parents better lives"

Many of our parents seek a comfortable retirement, having raised children and worked for many decades. How you can help them is by ensuring they have enough to sustain their retirement lifestyles. Having an open and honest conversation about money. It might be challenging or awkward at first, so here are a few tips to get you started. 

Need support? Holistically from your MPF account to savings on the side, our licensed advisors are always available to help you plan and utilise it effectively.

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"I want to retire early"

Despite the recent popularisation of cultural movements such as ‘tang ping’ (lying flat) and quiet quitting, we can agree that the FIRE movement (financial independence, retire early) is not dead.

Many people associate FIRE with extreme frugality or working 80-hour weeks. Going to extremes may work for some, but to others, it is simply not sustainable. It is not wrong, however, that in essence, most of us just want to not have to rely on employment for survival in old age. 

Besides saving or earning more, one type of FIRE – CoastFIRE – particularly emphasises on investing sufficiently early and often. Why so? Investing allows your money to compound without an exponential increase in time or effort. Here’s a chart to illustrate:

If that has convinced you to start investing early, here’s how you can plan and invest for your retirement.

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Invest the SMART way with Endowus

Working smart, not hard is the paradigm of the century. You make the SMART goals, while time, compounding, and your money do most of the hard work. At Endowus, we simplify investing by 

1. Making high-quality, institutional-grade investment products more accessible to our clients, and
2. Equipping our clients with the tools, knowledge, and guidance of our client advisors to make better investing decisions.

Get started on your New Year’s resolutions today: sign up for an Endowus account, create your financial goals and we will recommend suitable portfolios for you.

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