Is investing your new year's resolution? Take action now

THERE are some classic new year resolutions: exercise more, spend more time with loved ones, quit drinking, and improve your finances. Of these oft-heard declarations, bettering one's financial situation may be one of the most challenging. Where should we start with such a seemingly complex task?

According to research commissioned by Syfe, 56 per cent of people spend more or a lot more than usual during the end-of-year holiday season, despite 94 per cent of the respondents saying they had personal finance resolutions for 2022.

This overspending puts us at a disadvantage when it comes to achieving our financial goals as January rolls in. In fact, 7 out of 10 respondents specifically said they want to grow their money through investments next year. For those that want to make 2022 a year to invest, there are 2 clear challenges: making prudent financial decisions over the festive period (and beyond), and then growing those extra funds through investing.

Keeping festive spending in check

It is one thing to say you are going to spend carefully, but holding to this commitment is another matter entirely - you need strategies to help you to succeed. Taking a behavioural-change approach, Syfe partnered with a leading clinical psychologist in Singapore, Dr Annabelle Chow, to develop some tips to help manage festive spending.

A value-driven approach to spending: At the very start, identify the values that are important to you at your current life stage, and evaluate your motivations for making purchases. Is spending lavishly on gifts aligned with what you value in life, or can you allocate and invest money in such a way that will allow you to have rich experiences with loved ones?

Resisting impulsive purchases: If you feel like a purchase might be impulsive, practice the "STOP" exercise: Stop what you are doing; Take a breath and anchor yourself; Observe what you are feeling and acknowledge the urge to purchase; Proceed with greater clarity after thinking about your values and priorities. After this, you can thoughtfully consider the pros and cons for your decision.

Start with small, achievable steps: Once you start to get into the habit of incorporating small steps into your daily routine, you may find that it is easier to work up to something that requires more commitment when you feel ready. Go easy on ourselves and celebrate any progress we make.

Turning festive savings into gains

Now that you have employed some techniques to rein in your end-of-year spending, you can start to make that money work for you in 2022. From the survey, 76 per cent of people have indicated that they desire to grow their money to beat inflation, and similarly when it comes to growing wealth. This is not surprising, given the projected average inflation rate of 1.5 to 2.5 per cent for 2022 by the Monetary Authority of Singapore.

Start with small steps, turn them into good habits: Assuming that you are new to investing, you might want to start off the year with some small steps that form part of a regular commitment, such as allocating a certain amount each month to be put into investments.

This consistency will help to create a healthy routine and will, over time, lead steadily to a sizable portfolio in the long term. You should also make sure that whatever you put aside to invest still leaves you with emergency funds in case of an unexpected financial issue. This emergency amount means you are less likely to have to withdraw or shift from your original plans, giving them a greater chance to meet your long- term financial goals.

Reflect on where you are in your investment journey: For those that are more experienced, the new year offers an ideal moment to reflect on where you are in your investment journey, and to intentionally map out some goals for the next year.

You might have some particular themes you truly believe in that you want to capture in your portfolio, or a commitment to greater value-led investing such as increasing your exposure to more ESG (environmental, social and governance) assets, or simply committing a larger amount to investing and adjusting your lifestyle accordingly. This period is an opportunity to slow down, think, and to cast your mind forward to the end of 2022. When doing so, do not forget to reflect on the year that it has been and grow from what you have learnt.

Stay invested and diversify, diversify, diversify: Once you have done some due diligence, the best thing you can do is to start - even if it is just small amounts. It is often said that time in the market beats timing the market; predicting what markets are going to do can be extremely difficult, and so it is better to get in earlier in order to gain the advantage of long-term growth, rather than trying to constantly buy and sell to improve your position. This is particularly important during times of greater volatility, such as what we have seen in recent weeks. Proper diversification of your portfolio, including assets such as bonds and equities that span industries and geographies, can help to guard against some of the risks associated with volatility. You may also choose to invest in assets such as exchange-traded funds, which offer immediate diversification without your having to actively choose the assets yourself.

Ultimately, if growing your wealth through investments is something you are considering, now is the time to start. You can enjoy the end of the year and all the associated celebrations, and treat yourself and your loved ones for a fruitful year's work, while still being careful with spending and creating a financial foundation from which to start investing.

So, here is to a happy season ahead! Do not just hope that your financial resolutions will come to pass - you need to make them happen.

The writer is partner at Syfe.