A few days ago, I received a text message that made me smile. "We signed up for Dave Ramsey's Financial Peace University," the message read. "We start right after new year's day."

The message was from a family friend, a married father of four whose annual household income is close to $200,000, and in the top 5 percent of households in the U.S. according to the New York Times.

"We're ready to make a change," he said. "We make too much money to not know where it's going."

I could relate. Only a few short years ago, my husband and I were in the same boat. Well, we were kind of in the same boat. We didn't make nearly as much as they do, but we were blowing through what we did make without knowing where it all went. It was frustrating.

"This is the year of change," his last message read.

"The year of change?" I replied. "I like that."

The year of change

I don't know what it is, but something about the new year makes us want to reflect on our own imperfections. It makes us think. It forces us face to face with our regrets. It also makes us consider what we can do to make this year better than the last.

"We as humans love fresh beginnings and we get a new chance every January 1 st," says Shannon Ryan, a certified financial planner who has worked with individuals and businesses for the last 20 years.

And there's nothing wrong with new year's resolutions, right? In theory, choosing to make one positive change each year could only be a good thing. Think about it. This year could be the year you start exercising. Next year you could focus on nutrition. The year after that could be the year when you finally stop overspending, once and for all.

Then, boom, you've evolved from an exercise-hating spendthrift to a CrossFit enthusiast who saves 90 percent of their income. And you did it all over the span of just a few years, right?


According to Mrs. Ryan, it doesn't quite work that way.

"Far too many resolutions only last a week or two and we fall back into old habits," she says. "To make lasting changes you not only have to desire the change but you need to physically put into motion the change."

If not, you'll just be promising yourself the same things a year from now, says Ryan. And maybe even the year after that, or ten years from now. Unfortunately, there is no statute of limitations on regret.

Moving beyond resolutions

In order to move beyond resolutions, you have to make a lifestyle change. And that's exactly why people compare their financial challenges with their relationship with food. The similarities are striking. After all, it's easy to start a new diet on a Monday (don't all diets start on Monday?) and do awesome until about Thursday night when your husband breaks out a giant block of cheese at 10:00 p.m. (story of my life). Then, all of a sudden it's Friday and you're scarfing down nachos at Applebee's while secretly hating yourself. Oh, but you're totally going to restart the whole thing on Monday, right?

Been there, done that.

Whether you overeat or overspend, pretty much the same rules apply. To get your financial life on track in 2014, Shannon suggests these steps for permanent, meaningful change:

1. Have clear specific goals. Write them down and look them over often.

2. If you have debt, focus on paying it down this year.

3. Build an adequate cash reserve. "This is the reason many get in debt in the first place," says Ryan. "You need to have 3 to 6 months of what you spend in a cash reserve. Having a nest egg gives you a sense of financial freedom."

4. Save! Even if you do not think you can. Start small, but save.

5. Protect yourself. According to Ryan, the new year is the perfect time to ensure you're properly insured. This could mean buying life or disability insurance, or just updating your current policies to match where you are in life.

6. Become Tax Literate. "Review your return even if you do not prepare it," says Ryan. Benjamin Franklin once said "nothing is certain but death and taxes." You should understand how you are taxed.

Resolutions can work when we commit ourselves to a goal and get backup to help us achieve the goal, says Ryan. "Most of us need accountability to make that happen."

It's easy to spend

Now let's get back to my friends. You know, the ones who are earning almost $200,000 per year, yet just signed up for Financial Peace University. Yeah, those people.

It sounds crazy, doesn't it?

It really isn't. Life happens.

When you're used to a high standard of living, it's easy to let it get out of control. When your neighbors, friends, and relatives are basically "The Joneses," it's easy to forget how most people live. And when you're a high-earner, it's easy to think you'll always have enough. As we all know, lifestyle inflation has a way of sneaking up on you if you're not paying attention. And when that happens, you can lose perspective in a hurry.

The most important thing is that they've realized they need help. And even though struggling on a high income is the epitome of a first-world problem, it is still a problem nonetheless.

And the fact that higher earners struggle too just illustrates this unfortunate truth:

"It doesn't matter how much you make. If you spend it all, there will be nothing left. Period."


Truer words have never been spoken.

A new year, a new opportunity

Today marks the beginning of an entirely new year. What we do with it is (mostly) our choice. If you're struggling, today presents yet another opportunity to analyze where you are and more importantly, why you're there.

According to Ryan, the best gift you can give yourself is the gift of "action." Owning your financial future is the first step toward making resolutions that stick. "And if you need help, ask for it," says Ryan. "Regardless of how much money you make this year, money will flow through your hands. You get to decide how to handle that money."

So, today's the day. What changes will you make? What steps will you take to become your ideal financial self? This day is yours.

One year from now you will look back. And hopefully, you'll be proud of what you see.

Shannon Ryan is a Certified Financial Planner and has worked with individuals and businesses for 20 years, helping clients feel more financially prepared. You can check out her blog, The Heavy Purse, or follow her on Twitter.

Are you making resolutions for 2014? If so, what are they?