Crash diet for your finances
Is crash dieting good for your finances?
Crash diets seem to be all around at this time of year! While watching tv over the last few days, it seems every other advert is for some kind of diet or exercise plan/DVD (if not that, then for summer holidays!).
This got me wondering how many people think about a crash course for their finances after the boom and bust of Christmas.
It seems like an annual marketing frenzy in the food and drink businesses, quickly followed by the dieting and exercise industries going overdrive on their advertising. Do they all collude?! I don’t know but it’s a yearly pattern around Christmas and big business, that’s for sure.
Like the crash diet, another definate pattern is the bust of many people’s finances after Christmas. It always amazes me, in these recessionary times, how busy the high streets and stores are during the run up to the holidays. People like thousands of ants running manically around to buy gifts, food and drink.
It doesn’t seem to make sense when the news is always telling us how many more people are out of work, losing their homes and in financial dire straits. I strongly suspect that the annual buying frenzies continue in many cases, because they are being funded by credit cards and loans-somebody else’s money and they are going to want it back very soon with interest.
So for a lot of people, the Christmas spending spree is very much like the crash diet. It’s temporary, it may be good for a while but it is not sustainable and not an advisable way to carry on to create positive lifestyle change.
So how can we crash diet for our finances?
Firstly, I don’t think the crash diet is a very helpful thing in any case. What does crash diet mean? It means losing weight fast. It means behaving very differently for a short period of time, reducing calorie intake and maybe the type of foods we eat, to achieve a certain result (usually a target weight) after a period of over indulgence.
Most people know that the problem with this is that it is so easy to return to old habits, put the weight back on and be back to square one in no time.
The fact is that it takes time, patience and perserverance to create new habits and behaviours. I’m not a great fan of new years resolutions for this reason-often it is a short burst of enthusiasm, buoyed by the temporary enthusiasm of others for their own little commitments. All forgotten about half way through January.
Isn’t it far better to create positive change all through the year? Instead of setting very large, difficult to achieve goals once a year, just because everybody else seems to be doing it, I believe it is much more sensible, rewarding and achievable to set the smaller goals all through the year. Set yourself on a course of continual improvement and have fun ticking the small steps off.
Improving our financial situations, I believe, should be approached in a stepped, continual way. Tick off the small goal and move on, pat yourself on the back for the slight improvement and move to the next. Like looking at the impossible-to-climb mountain and then realising it is achieved one step at a time, developing a constant routine of accomplishment, small reward and move on is much more likely to keep you focused and motivated.
Rather than the crash diet, a resolution and a commitment to take the steps and make small changes consistently, can have a huge and beneficial affect on our financial situations. It could be something as simple as cutting down on eating out or shopping around on the household utilities, combined with some new ways of generating additional income.
The Telegraph has published some tips for your personal finances in 2013. I summarise these below:
- Edit your bank account-Get in control of outgoings, get on top of direct debits. Cancel anything not needed or outdated
- Make the most of low interest rates-Interest rates are at an all time low. Switch any borrowing to a lower rate provider
- Check your life cover and make a will-Protect close family and the people who mean the most. Many do not like to think about these things until very late, so make 2013 a year to sort it out.
- Clean up your credit file-It’s just £1 to check your credit file with Experian and Equifax. Close any redundant accounts to reduce the risk of fraud and improve credit rating
- Consolidate your savings-Shop around for the best deal and benefit from the best interest rates and ease of management by using one good savings account or tax-free ISA
- Ditch the high cost debt-Switch to 0% deals on credit cards. Get rid of store cards and better still, try to get rid of credit card and store card debt completely
- Go for cash back-If you are one who clears your credit card balance each month, make the most of cashback cards
- Review your pension (s)-Many lose track of where our pensions are invested and if they are working at their best. Track it down and review it
- Start to set yourself some financial goals for 2013-Be as specific as possible with monetary values and set some dates to achieve certain financial goals
- Devise a budget-Work out how to achieve these goals. They need to be realistic and like a diet, you will give up if you starve yourself financially.
I would add one more to this list and my number 11 is:
11. Find a way to produce additional income-Once our finances are in much better shape on the expenditure side, any additional income we can produce on top of our day-job or usual income, will have a very marked affect on our lifestyles.
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See you on the next post!