New Year's Eve. Let's see, what should it be this time? Cut out caffeine? Eat less salt? Read more classics? Do more sit-ups? Resolve to turn the other cheek? Learn to "know my rights as a taxpayer?"
Yup, that's actually one of 10 New Year's resolutions recommended by H&R; Block, the tax-preparation people.
"Ask your tax preparer for information on taxpayer rights in audits, appeals or collection procedures, or obtain a copy of IRS Publication 1, 'Know Your Rights as a Taxpayer,' " intones a Block press release.
Geez, how boring can a resolution get? I don't ever sound that bad, do I?
Financial advisers pour out suggested resolutions as each new year arrives, and most make sense.
Keep better records, they say. Start saving for retirement and your children's college education. Update your will. Make sure you have enough insurance. Fully fund your 401(k). Pay off high-interest debt. Keep a record of all those corrosive little expenses such as snacks.
OK, fine. But all that's pretty obvious.
Isn't there something else? A common denominator? A core value? A governing principle? A kind of grand unifying theory of personal finance that can be put to practical use in the coming year?
There is and after years and years of noodling over the matter, I have discovered it.
It is this: Recognize that the value of a dollar is not fixed.
Sure, any dollar bill will buy as much as any other dollar bill. But the value of a dollar varies according to how it is spent.
A dollar thrown away on a stale package of cupcakes is rendered worthless. Not so a dollar used on a tropical vacation in January.
The essence of personal finance is to infuse dollars with the greatest possible value as only you can define it. What matters to you? What really matters? That's where money should go. The place to skimp is with something that doesn't do much for you.
I have friends who call me cheap, but I think of it as value-conscious, or selective. My whole wardrobe can be washed in one load, but I'll spend $75 an hour on flying lessons. When the dryer stopped spinning the other day, I took it apart myself and put in a new belt rather than phone a repairman, saving all of $100. But then I made plans for a pricey windsurfing vacation in Venezuela.
What's at work here is a principle of marginal value. How much extra value do you get by spending more than you absolutely have to? Is the value worth the cost?
Cars are a great example. How much extra use, pride or satisfaction would you get from a car that costs $40,000 instead of $20,000? If you're miserable with the old clunker that keeps leaving you stranded, the problem can be solved with a sound, inexpensive used car. Is the extra thrill of owning a new SUV really worth another $20,000?
Consider that the $20,000, if invested instead, could be worth $100,000 in 20 years perhaps enough for 10 terrific vacations.
(OK, this isn't very deep, I know. But personal finance is only about money not love or health or achievement.)
Lots of personal finance advice is about self-denial. But life is short, and financial planning shouldn't forsake the present in the name of the future.
There are lots of practical steps one can take in the New Year. You can get a computer and financial software, or hire a pro to devise your long-term plan. You can rebalance your portfolio or refinance your mortgage.
But a New Year's resolution should be simple and achievable.
So here's mine: to look at everything I buy and ask, "Is it worth it?"
I can do that and fit in a few more sit-ups, too.