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It is almost the end of the year. Which means, of course, that it is almost the start of next year. When it comes to money, the turning of the year means just one thing: New Year’s resolutions!

Over the coming month or so, most of us will have some time to relax in a hammock or on a couch and simply let our minds wander. (If you are not planning that for yourself, there is still time to change plans!) So, here are some tips to keep in mind if you plan to let your mind wander to how things are going for you financially.

Compare yourself to yourself – and no one else!

Comparing yourself to others is almost always bad news. Think about modern media. Our lives are chockablock full of media images designed to make us think that other people are doing better than us. This is not just an urban myth, by the way: research conducted at the University of Warwick found that the amount of money spent on advertising within a country’s economy was negatively related to the levels of happiness reported in that country. The more a country spends on ads, the sadder its people become. Ads make for sads.

Think about a typical advertisement. It usually gives you someone to compare yourself with – and you will almost certainly compare yourself negatively. None of us look like Brad Pitt or Cate Blanchett, whether we buy their skincare products or not.

Comparisons to other people can make us unhappy. This is true even when it comes to money. There is always someone who is doing better than us financially: happier, wealthier, ‘better.’ If we spend too much time thinking about these ‘other people,’ we can become discouraged.

A better person to compare yourself to – especially as the year rolls over into a new one – is yourself 12 months ago. Ask yourself a simple question: do you feel better about your financial management than you did at the end of 2021? Is money creating more enjoyment and less stress than it was a year ago?

Hopefully, the answer is yes. And if it yes, then take some time to congratulate yourself and enjoy the relative peace that you are now experiencing. If the answer is no, try to be non-judgmental when you think about what has changed. Why do things feel less positive than they did 12 months ago? Identifying what has changed is the first step to making things better.

Can you ‘work’ smarter, rather than harder?

To receive money, we need to offer one or more of three things to the economy: our time (labour), our money (capital) or our land (property). If we let someone else use one or more of these things, they will pay us in return.

Think of the young man stocking shelves at your local supermarket. He is letting the supermarket use his time to get their shelves stacked. For every hour he gives the supermarket, they give him an hour’s wages.

Most of us start our economic life selling our time as labour. The problem is, when we are selling time to an employer, we can’t use that time for anything else. This can become a problem if we want to do other things with our life, such as travel or care for people we love.

That is why the ‘best’ income we can generate does not come from selling our time. Rather, it comes from using our capital to invest, either directly or by first acquiring property which we rent out to others. The beauty of these types of income is that we can generate them while spending our time doing something else. The income these assets generate is called ‘passive’ because we earn it without any physical effort.

So, ask yourself, which of the three ways to generate income are you using? If you want to increase your income, then it might simply be a matter of finding a second or third source of income, rather than selling more of your time.

Are there any holes in your bucket (purse, wallet)?

As you lay in your hammock, think specifically about how you spend your money. Then think objectively about whether each expense is a need or a want. If an item of spending is a need, then think no further. We all need to eat, drink, be sheltered etc and there is no joy or benefit to be had by trying to save money here.

But if the spending is a want, ask yourself as objectively as you can: is the spending worth it? Do I get a benefit equal to how much I am spending (including anything that I cannot buy because I have already spent the money)? If the answer is yes, then try to keep this in mind. You will be surprised

how you can come to be even happier about spending money when you think about the benefits it brings.

If the answer is no, then you are well on the way to stopping that spending. After all, once you have quietly admitted that the money you are spending does not make you happier, you will naturally be less likely to keep spending that way.

Spending money on things you do not need or actually want creates a hole in your finances. Once you realise that there is a hole, you will naturally close it. And you will immediately have more money so save or spend on things that actually do bring you joy.

The key here is to not judge your decision. If you really do think that a more ‘expensive’ brand of skincare products makes you look like Brad Pitt or Cate Blanchett, don’t feel bad about that. Just make sure that you enjoy those products when you use them. And invite your friends to call you Brad or Cate!