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2014 is the year to make your New Year’s resolutions pay off

In a few weeks time we will collectively participate in the renewal that comes with New Year’s celebrations, including that time-honoured tradition referred to as the New Year’s resolution.

Last year, while celebrating with friends, I took an informal poll of intended resolutions and came up with the following top 10 list of resolutions: quit smoking (drinking coffee), reduce alcohol consumption, start exercising, eat healthier, stop excessively shopping, begin a savings plan, pay down debts, learn something new, help others, and get organized for the new year.

As we approach the end of 2013 and the beginning of 2014, perhaps it’s time for all of us to take stock of what we really want to achieve in a New Year’s resolution

As it turns out, our collective progress towards our New Year’s resolutions can produce significant financial and non-financial benefits.

According to one study by the American Psychological Association (APA), only 40 to 50 per cent of us will actually achieve what we set out to do in 2014.

Indeed, less than 46 per cent of our resolutions last about six months.

Let’s start with reducing our caffeine consumption — a tall order, if only because of our national addiction to Tim Hortons and Starbucks.

However, a habit that’s bad for your physical and financial health may be a great place for all of us to begin in 2014.

For those of us (myself included) who are addicted to a Tim’s or Starbucks’, there is a savings of at least $650, or $1.80 a day. A package of cigarettes costs around $12 a day — a potential savings of just over $4,300 annually.

These savings could be invested to earn a return of 19 per cent, if used to pay down a credit card. Remember, every time you reduce a debt the interest saved is equivalent to earning the rate of interest charged by the bank or credit card company.

On the other hand, others may chose to reduce alcohol consumption. Spending just $25 a week less on alcohol could improve our health and wealth. That’s a savings of $1,300 annually, and if invested in a tax-free savings account at five per cent, would grow to $62,000 in 25 years.

Eating healthier is something that all of us could strive for in any year.

We’re aging as a population, and with age comes the middle bulge. It turns out that eating healthier foods could also be good for our collective pocket books.

According to a 2002 U.S. Nurse’s Health Study, people who ate healthy diets spent as little as $3.48 per day on food, compared to those that ate unhealthy diets. They spent as much as $5.75 a day, which means a potential savings of $830 annually. We’d feel better and could use the savings to make a donation to the local food bank, perhaps helping others less fortunate eat and feel better.

Helping others can also be financially rewarding.

Remember, charitable donations can be claimed as non-refundable tax credits, which can reduce taxes owing. More money in your pocket and less in the government’s can be a good thing.

Others may chose as their resolution to reduce excessive shopping. According to, Canadians spend $3,720 annually on things they don’t need. Reducing excessive shopping by just 50 per cent, or $1,860 annually, would result in a savings of just over $1,800, if this money were used to pay down a loan priced at eight per cent.

What is unique about learning something new is that it has the potential to earn huge returns on both our financial and human capital, not to mention expand our sphere of friends and colleagues.

First, tuition expenses, up to certain maximums, can be claimed as a non-refundable tax credit, putting more money in our pockets.

Second, improving your human capital can earn solid financial returns. For example, taking a course that improves your employment skills can net an ROI of about nine per cent, assuming you get a raise of just $50 every two weeks and tuition was $500. The return would be higher if you include tax savings from claiming the non-refundable tuition tax credit.

Self-improvement can also be physical. Friends and colleagues tell me that exercise is good, and a great way to meet new people (friends keep suggesting that this should be one of my resolutions). Of course, the savings in both time and money from not shopping as much can be used to pay for that gym membership, helping us get fit.

In order to be able to attain one or more of these resolutions, getting organized has to be a priority. The better we manage our time, the less chance we have to use that time-honoured excuse, “I just don’t have time.”

One great way to start getting organized is to get all of the documents you need to file your 2014 income tax return in one place, as early as possible. April 2014 is just around the corner. Remember, the earlier you file, the sooner you will receive that potential tax refund.

If your household is like most in Canada, you will spent about $1,600 on Christmas over the next few weeks, according to the Bank of Montreal. By collecting a tax refund earlier, you can pay down holiday debts faster, saving about $25 if your credit card company charges you 19 per cent. Not a bad way to begin the New Year.

All of these resolutions are great goals, but to me the real power of New Year’s resolutions is their power to bring all of us together in ways that perhaps we never intended, be it through healthier and happier friendships or better communities.

Remember, the new year will arrive sooner than you know, and our one true resolution should be to strive to be in control of our collective financial and non-financial destinies.

Easy Money is written by Patrick O’Meara, a former instructor at Red Deer College’s Donald School of Business, who is now chair of finance and accounting programs at Centennial College in Toronto. He can be reached at



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