The end of the year is quickly approaching, and you might find yourself making a few resolutions for next year. While it’s common to focus on your health or personal development, it’s also important to set some money goals that will directly impact your financial well-being. Setting achievable financial goals for the new year is a proactive step towards securing your financial future.
I want to help you do this by sharing a few ideas that you can use to formulate some new year’s financial resolutions.
Why are Financial Resolutions Important?
Clear Direction: Financial resolutions give you a clear direction for your money. Clarity is crucial if you have specific dreams and goals you wish to accomplish. Without it, you might find yourself drifting aimlessly or without the necessary funds to do what you want.
Increased Savings: They encourage you to save and invest, helping you build grow your wealth and build a financial safety net for those unexpected challenges that inevitably show up.
Lowers Your Debt: Having specific financial goals helps keep you motivated to pay off debt, which reduces your financial stress and opens up many more options.
Improves Your Financial Health: Just as health-related resolutions can help you stay fit, financial resolutions improve your financial health. Regular check-ins and adjustments will ensure you’re on the right track. Plus, less financial stress will also benefit your physical health!
Achieving Dreams: Your financial goals are often tied directly to your dreams and aspirations. Achieving these goals brings you closer to realizing your dreams, and who doesn’t want to make their dreams come true?
Now that we understand why financial resolutions are essential, let’s delve into the process of setting achievable money goals.
How to Set Achievable Money Goals
Review Your Current Situation: Before setting financial goals, it’s crucial to assess your current financial situation. As you already know, a detailed budget is a necessary part of financial stability, but you can’t create one until you know where you’re currently at. How much money is coming in, how much is going out, and exactly where is it all going? Answering these questions is the first step, and the next one is creating your detailed budget.
Set Specific Goals: Vague goals like “save more money” simply do not work. Instead, set specific goals that are measurable. For example, instead of saying, “I need an emergency fund,” say “I will save a minimum $3,000 in an emergency fund.” And rather than stating, “I will pay down some debt,” you can say, “I will pay off $10,000 in credit card debt by the end of the year.” Specific goals enable you to take specific actions, which puts you on the path to financial security.
Prioritize Your Goals: You might have multiple financial goals, but it’s essential to organize them by priority. Decide which goals are most important to you and focus on them first. This prevents spreading yourself too thin and greatly increases your chances of success.
Break Down Your Goals: Large goals can feel overwhelming, which decreases the odds of you reaching them. It’s normal to shut down when feeling overwhelmed, but you can prevent that by breaking down your goals into smaller, more manageable steps. For instance, if your goal is to save $10,000, break it down by aiming to save $833 per month. The smaller amount feels manageable, and that means you’re far more likely to make it happen.
Give Your Goals a Deadline: Someone once said,“A goal is a dream with a deadline.”
Having a timeline for your goals creates a sense of urgency and accountability, which will help keep you engaged and motivated. Be sure to give yourself a realistic amount of time so that you don’t make the process stressful. More stress equals fewer dreams coming true, so plan for enough time to accomplish a goal, but tight enough to give you that sense of urgency. This will also help you track your progress.
Adjust as Necessary: Life is unpredictable, and your financial circumstances may change throughout the year. Be flexible and willing to adjust your goals if needed. It’s more important to stay on track than to rigidly stick to your initial plan.
Seek Professional Advice: If you’re unsure about how to achieve your financial goals , consider consulting a certified money coach or financial advisor. They can provide expert guidance tailored to your specific situation. You might be surprised at how much quicker you’ll achieve your goals when you get a little help from the right person.
Examples of Achievable Money Goals
Emergency Fund: An emergency fund is a financial safety net that’s set aside for the unexpected. Work toward saving three to six months’ worth of living expenses in a high-yield savings account. It’s perfectly fine to start with a small goal, like saving $1,000, and gradually increasing it when you can.
Pay Off High-Interest Debt: High-interest debt, such as credit card balances, can be a huge financial burden. Set a goal to pay off a specific amount of debt by the end of the year and allocate extra funds towards that goal each month.
Save for Retirement: Financial freedom in retirement doesn’t just happen. It takes commitment and good planning, but it’s well within your reach. Preparing for retirement doesn’t have to be complicated or difficult. Consider contributing a percentage of your income to a retirement account. If your employer offers a matching contribution, take full advantage of it.
Investing: If you’re new to investing, start with a goal of learning and invest a small amount in a diversified portfolio. As you gain confidence and knowledge, you can increase your investment contributions.
Increase Your Income: If you’re looking to boost your income, start a side business, take on freelance work, or set a goal to attain a promotion at work. Increasing your income will significantly accelerate your progress toward your other financial goals.
Save for a Specific Purchase: Whether it’s a vacation, a new car, or a down payment on a house, creating a savings goal for a specific purchase can help you plan and save money. Even if you change your mind about the purchase, you’ll have saved money!
I hope you feel motivated and inspired to create some financial resolutions for the coming year. Remember to stay flexible, track your progress, and seek professional advice when needed. Your dreams are worth planning and working for, and with dedication and smart planning, you can make them a reality.