Here are three resolutions that don't require any effort, just a few changes in habit.
2013 is upon us, so it's time to start thinking about your goals for next year. I'm going to look at three easily achievable goals that won't cost you a penny, yet they'll help to enrich you, or at least de-debt you, which is just as good.
1. Tell the truth
Do you sit at home feeling silently guilty about your purchases or about debts? There's no need.
This feeling is not coming from anyone else; it's coming from inside you. It's important to distinguish between guilt and shame, according to Eugene Kandel and Edward P. Lazear in their paper for the Chicago Journal entitled “Peer Pressure and Partnerships”.
Guilt is internal, shame is external. You feel shame when you're caught shoplifting. Guilt is when you go shopping and feel bad about it, even though those around you don't take any notice.
Now, what if you were to talk to friends or family about how tight money is, about your worst spending habits, or about your debts? Would they respond with loathing, creating shame? If the answer is yes, you have to wonder what sort of friends they are.
But I would say the answer for most of us is definitely not. They may be shocked. If it affects them, they may also at first be angry that you kept it from them. But the chances are they will be, or become, supportive, even if you have previously lied or bent the truth. Many will admire your courage in admitting it and in your drive to make improvements. There is no need for guilt to suppress your money secrets!
A few years ago I worked on a project that involved reading the thoughts and experiences of thousands of debtors and former debtors. Those who had found the courage to admit their money issues usually had a very positive and helpful response.
What's more, it often encourages those around you to admit that they too could do with cutting back. You can then support each other to live within your means by changing your social activities to better fit your budgets.
2. A short bout of abstinence
This trick is to spend as little as you can for one to six weeks to help cut back on some Christmas debt, or to replenish exhausted savings.
This has been tested by some of my colleagues in the media, such as Harvey Jones. If you read his report, Seven days as a stingy git, you'll notice that some are less successful than others!
You do no clothes, gadget or DVD shopping whatsoever. Go to the library to get free entertainment or swap DVDs with friends. No coffees on the way to work and make your own sandwiches. Buy the bare essentials for your fridge, no big brands, and switch off lights when you're not using them.
[SPOTLIGHT]All social activities take place at your home, or your friends'. Each host raids his drinks cabinet for whatever rotten stuff he's tasted and pushed to the back for three years, and he tries to mix it into something drinkable. Then you play cards or a board game, or watch a DVD.
All those sorts of things could make you hundreds of pounds better off. If you're successful, try it again another time, perhaps adding on another week.
If you have feelings of guilt when shopping or because of debts, or you can't look at your bills, or if you have needed to use your credit card for holidays or Christmas over the past year or two, this resolution is not for you, because it has serious rebound potential. Splurging is common after a shock money diet, as with shock food diets. I've seen it, and studies have demonstrated it.
What you need in those circumstances is a real budget, and to face your outgoings and debts. That's not one of this article's three resolutions; although proper budgeting is extremely emotionally and financially rewarding, and boosts your self-confidence, it also takes many months of painful effort before you see results and start to enjoy your growing freedom – that doesn't fit with my three easy ideas today.
3. An ancient weapon to control your desires
That said, there are some very simple things anyone can do that will ease you into properly budgeting.
One of the oldest tools since we developed written language must be the list. The simple list is powerful enough to bring down unnecessary expenditures. Regardless of your financial position or your goals, having extra cash will be useful.
I have several suggestions for lists. My top one is to keep a spending diary for two months. Carry a piece of paper everywhere and write on it every penny you spend on household bills, shopping and everything else. After a month or two, inspect your list for patterns and areas where you could make cutbacks. Everyone who does this sees at least a few surprises where they can reduce expenditure without impacting their happiness.
Unless you want to get serious at budgeting, at this stage you're just trying to look for what your spending habits are, so keep it simple by not having columns for debt repayments, and put all credit-card spending under the appropriate heading – clothes, medical supplies, insurance or whatever – immediately after you make the purchase, not when you pay off your bill. This stops you from deluding yourself by buying, say, £80 of clothes with cash, and then putting another £100-worth on the credit card while counting it towards next month – because you know you'll only do it again after payday.
If you want an even more simple list, write a shopping list before you go to the supermarket.
Finally, start writing it down whenever friends and family show an interest in anything at all. More ideas give you more choice when buying them presents, which means you shouldn't have to make up for poor ideas by throwing too much cash at it. Since I started doing this years ago, I've received bigger compliments on my gifts, for less money.
Just don't go overboard. As much as your 30-year-old daughter might like The Nightmare Before Christmas, there are only so many themed bags and teddies she can take.
This is a classic lovemoney article