The start of a new year is a common time to make resolutions for personal growth and change, whether that’s getting healthy, expanding your education, or improving your finances. But only about eight percent of people who make New Year’s resolutions actually keep them. You won’t accomplish your goals without a solid plan for reaching them.
Here are seven steps you can take to help achieve your financial goals in the new year.
1) Define your goals. When setting financial goals, make sure that they are clearly defined and measurable. “Saving money” is not a clear goal; instead, determine a specific amount of money you would like to save. Set deadlines to help you monitor your progress, and take advantage of available tools for establishing and tracking your goals. There are plenty of books, websites, computer programs, and cell phone apps that can help keep you on track to achieve your financial goals.
2) Make realistic goals. Be sure to set goals that are attainable. Setting goals that are out of your reach can quickly become disheartening. Start with small, simple goals that are more easily reachable, such as saving just a small percentage of your income each pay period. If you find that goal easy to attain, raise the percentage. Start small and work your way up to bigger goals.
3) Prioritize your goals. Determine which goals are the most important to you. Maybe you want to take an international vacation, but you also want to save for a new car. Your current financial situation may not allow you to reach for both goals at once, so you must decide which goal takes priority. Keep in mind that long-term goals are more beneficial than short-term goals, so plans like saving for retirement should take precedence over more minor objectives.
4) Review your expenses. The best way to figure out how much you can save is to look at how much you spend. List out your monthly expenses, separating them into two categories: fixed spending, such as bills, and discretionary spending, such as unessential purchases. Once you’ve separated your expenses, review each item to determine how you can reduce that expenditure. The more money you can free up each month, the more you can save toward your goals.
5) Assess your financial habits. Are you quick to spend money on things you don’t need? Do you have a tendency to pay bills late? Creating good financial habits is essential to achieving your financial goals. Determine your bad habits and draft a plan for changing them. Set up automatic savings to make sure you’re always setting money aside. Use cash to limit your spending. If you have trouble paying your bills on time, set up autopay to make sure you never miss a payment.
6) Prepare for the unexpected. Most financial experts recommend setting up an emergency fund to cover any unanticipated bills. You should try to have about three to six months of your salary saved up in case of an unexpected job loss or expense. Keep your emergency funds in a separate account to eliminate the temptation to spend it.
7) Monitor your goals and progress. Review your financial goals and progress regularly. You may need to adjust your goals or set new ones. Reviewing your goals gives you an opportunity to reflect on what you want out of life and to make sure that you’re taking the necessary steps to get there. Don’t be afraid to reassess—your goals are not set in stone.
Reaching your financial goals can be daunting but not impossible. With a little organization, focus, and determination, you can achieve your financial goals and keep your financial new year’s resolutions.
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