How to achieve your New Year resolutions

published 6 January 2012

Another New Year. Another resolution. What should it be this time? I went on the BBC's Woman's Hour last week to discuss this very question. The other guest on the programme said that she didn't fancy resolutions much. She didn't like the "oppressive" notions of "obligation and duty" that they come wrapped in.

I'm not so sure. I rather think we could all do with a little more in the way of notions of obligations and duty. That's particularly the case when it comes to our finances which is why, when the other guest suggested everyone resolve to eat better chocolate in 2012, I suggested we all make a proper financial life plan instead.

"Save more" is generally one of the top resolutions made in Britain. But it is a pretty useless one: if you don't add a proper target to your resolution, it will fall apart long before the sales are over. It is too vague to work. "Save £200 a month until I have three months' worth of income sitting in a cash account" is better.

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But taking it further and making a financial life plan with a series of targets is the best way to go. Most of us neglect the management of our money. We get it, we spend it, we save it and we invest it. But we don't do so to a set plan. We don't sit down, decide realistically where we want (or need) to be financially and then work to get there. The results are obvious.

So here is what I would do. Sit down and work out where you are financially. How much do you earn? How much do you spend? How much are your assets worth? How much do you save? Then approach it from the other side. Which of those bits do you want to change and which can you change?

Look at the big picture and then set clear targets that might change that picture and that you have a real chance of meeting. The short-term ones might include finding higher-paid work by a set time, or just working harder to protect the employment income that you have; specific monthly debt-slashing or saving goals; running through all your bank statements properlyso you really know how much you spend and on what; or simply cutting up every credit card in sight.

Longer-term goals might involve regular overpaying on your mortgage so you own your house by a set date; or setting up and contributing to a pension with a view to hitting an ambitious retirement income. Finally, once you've made a plan, keep reviewing it. Look at where you are with your partner every six months; check your progress against your targets; and make new ones if you are ready to do so. Begin with the end in mind and you might get the end you want.

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.