“New Year, New Me.”

This is a famous phrase that everyone quotes at the start of the New Year as they wish to get rid of old habits and create a more positive outlook for the future. Often though, there is a debate about why people wait until the start of a new year to make these changes when they could do the same thing at any point in their lives. After all, New Year’s Day is merely another day in the year right? Why do we still insist on making New Year’s resolutions?

The answer lies in one simple, but important concept: Periodicity.

In the study of accounting, there is a basic assumption titled “periodicity” which states that companies divide economic activities into artificial time periods- whether it is annual, quarterly, or monthly.

Businesses that seek growth will do so by determining their goals—including increasing sales revenue, decreasing operating expenses, or any other factor in order to increase profitability—and working towards improving the financial statements for the subsequent period.

Similar to the way businesses think and operate, it is human nature to divide our time into these periods as well. By making a New Year’s resolution with the hope that we will be able to achieve our desired positive changes, it allows us to compare our own growth from one time period to the other.

So whether your New Year’s resolution is as specific as getting all A’s and going to the gym everyday, or as general as helping the less fortunate and being a kinder individual- may this new time period be much more flourishing than the last one!