Crafting Financial Goals for the New Year & Beyond
New Year’s Day marks one of the most popular moments when it comes to setting goals. Resolutions allow you to start the year off with personal improvement on your mind, giving you something to strive for in the months ahead.
One of the most popular goals people set is improving their financial situation. The challenge with financial goals is that they are usually longer term, meaning it’s often difficult to stay motivated when the prize is so far away.
In this article, we’ll provide tips on how to break longer-term goals into bite-size pieces to significantly improve your odds of success. Keep reading to learn how to achieve your financial goals in the new year and beyond.
Step #1: Identify Your Goals
What financial objectives are you hoping to achieve in the months ahead? Start by listing out areas of your finances that you believe will relieve stress or strengthen your financial position. Use this step as a brainstorming session to gather ideas. With financial goals, you’ll often find many sections overlap – revealing a single tactic that can help improve multiple areas.
For example, common financial resolutions include:
- Reducing or paying off debt.
- Improving your credit score.
- Establishing or growing your emergency fund.
- Saving for retirement.
Trying to achieve all these goals at once can be challenging, leading to a higher chance of not fulfilling any. Instead, look for overlapping features or tools that can address the bigger picture.
A common underlying theme for these goals is the need for a realistic and active budget. Following a budget can free up funds to reduce debt and ensure other monies are set aside for savings. Reducing outstanding debt will instantly help you start to improve your credit score.
Look for ways that your financial goals are linked. Then, identify the steps to help you work smarter, not harder.
Step #2: Get Specific
Once you identify your financial goals, it’s time to get as specific as possible. You want to avoid overly broad objectives. For example, stay away from goals like “Grow my emergency fund.” Instead, identify a particular amount you want to reach, establish a deadline, and list the purpose:
I will increase my emergency fund to $3,000 by December 31st.
It’s much easier to stay motivated and monitor your progress with precise and attainable objectives.
Step #3: Break Up Your Goal
Many financial goals are longer-term, making it harder to stay motivated. Imagine you’re saving for a down payment on a new house you plan to purchase in three years. Your financial goal might look like this:
I will save an additional $15,000 over the next three years as a down payment on my new house.
The thought of saving $15,000 can be daunting. Instead, break that goal down until it’s more manageable for you. Start with annual goals, then keep going until you’re comfortable:
- I will save $5,000 per year for the next three years.
- I will save $1,250 per quarter for the next three years.
- I will save $416.67 per month for the next three years.
- I will save $192.31 per paycheck for the next three years. (assuming you’re paid biweekly)
Putting aside $192.31 per paycheck is much easier on the eyes than the $15,000 lump sum. While this goal was lofty, smaller financial goals could appear minuscule and easily attainable once you break them down.
Step #4: Schedule Your Actions
This next step is crucial in helping you stay motivated and achieve your goals. You need to identify the actions you must regularly take to ensure you’re on track. For example, if you want to improve your credit score, your schedule might look like the following:
- Review current credit score monthly.
- Schedule all loan payments and monthly bills on my calendar.
- Make payments at least 7 days before the due date.
- Review my budget at the beginning of the month.
- Balance my budget at month-end.
- Monitor credit card transactions and balances weekly.
While these might seem like a lot of steps, most can be accomplished in a few quick minutes. The best way to ensure you stay on track is to set reminders on your phone or schedule appointments with yourself on your calendar. By blocking off a set time for yourself monthly and treating it as an appointment, you’ll be more likely to stick with it.
Step #5: Hold Yourself Accountable
A final and crucial component of setting personal or financial goals is holding yourself accountable. Keep track of your progress and regularly check in to ensure you meet your deadlines. Consider sharing your goals with a trusted friend or family member who can act as an accountability partner.
Setting rewards for completing your goals by the deadline is another way to stay motivated. Or, if you respond better to negative reinforcement than positive reinforcement, you can consider imposing a “penalty” if you get off track. Determine the most effective accountability method for you and incorporate it into your plan.
Bonus: Use Additional Tools
There are numerous tools and resources available to help you achieve your goals. For example, payroll deduction allows you to set up specific amounts to automatically be withdrawn from each paycheck and deposited into the account of your choice. This service is ideal if you are working on saving goals or want to ensure you never miss a loan payment.
Additionally, there are many apps and websites that will help you create and manage budgets, check your credit score, and set reminders on your devices. Explore which tools best complement your financial goals and commit to using them regularly.
We’re Here to Help!
Setting financial goals helps you stay focused on your priorities and empowers you to take the necessary steps to achieve the life you envision. Regardless of your financial goals this year, the most important thing is to start taking steps toward attaining them. By regularly checking in to evaluate your progress, holding yourself accountable, and taking advantage of the useful tools available, you will be on your way to achieving your goals before you know it!
If you want to open a savings account or have questions about the tools available to help you achieve your financial goals, we’re ready to help. Please stop by or call 732-634-0600 to speak with a team member today.