The new year is a great time to think about new goals. January sees an uptick in new diets, career development plans and home renovation plans, but some of the most popular new year’s resolutions are about money.
Setting financial goals in the new year is a good idea. It’s a natural time to restart, reset and rethink your finances. However, for a lot of us, the concept of finance is huge and it can be hard to narrow it down to goals you can take action on.
Follow these steps to make your good intentions towards your financial new year feel more do-able.
1. Choose Your Goals
The first step in setting financial goals is to decide what they are. This might be the easiest part of the process. A financial goal can be about saving for retirement or college. It might be about making a major purchase, like a home or a car. It might even be about having an experience, like an international vacation or starting a new hobby.
The key to choosing your goals is to give yourself space for the things you really want and need. Don’t start with limitations. Instead, think big, at least to start. When you make a specific plan on how to reach your goals, natural limitations will arise, but don’t start by thinking about what you can’t do. Think in terms of your ideal life, and what you can potentially do.
2. Define Your Goals
Once you’ve decided some general financial goals for the new year, it’s time to get specific. A goal without a plan is just a dream. To make your financial hopes your reality, you’ll need a plan with clearly defined steps to reaching that goal.
For example, if your goal is to buy a new car in the new year, it’s not enough to just decide the make and model. You’ll also need to find the cost of purchase and upkeep and look at options that could make a difference in the overall price. Once you’ve figured out the total financial need of your goal, you’ll be able to decide if it’s realistic and how you can reach it.
3. Achieve Your Goals
Once you know the overall price tag on your new year’s financial goal, your next step is to take real actions to achieve it.
If your financial goals require you to rethink your regular spending, the best way to help yourself is to create a budget or a spending plan. Figuring out exactly how much you earn and spend is key in understanding how much you can afford to put toward financial goals. It can also help you know whether you need to earn additional income to get to your financial destination in the time period you’ve set.
Sometimes the goal is actually having a budget. Thinking more intentionally about money and being financially savvy are things that require time, experience and education. If your financial goal in the new year is to be better with your day-to-day finances, an easy way to get started is to play around with some online calculators and tools that can give you a quick snapshot of where you are financially and where you can go.
Sometimes a financial goal is actionable, like buying a new wardrobe or paying for classes. Sometimes it’s about having money stashed away for a rainy day.
If your financial goals are about saving for the future, or even just for an emergency, make sure you’re saving smart. Look into high-yield savings accounts, which maximize the money you put away by earning a higher rate of return than a regular savings account.
Pay off Debt
Debt is a common financial bugaboo, but it doesn’t have to be. Debt isn’t necessarily a bad thing. In fact, it can be a great tool to help you bridge the gap between your current financial foundation and your future earning potential. All debt does need to be paid off eventually, though, and deciding when and how you pay it off is key to managing what you owe.
Paying a little extra on monthly payments for loans can save you a ton in interest in the long run. Paying off revolving debts like credit cards in full every month can have a positive impact on your credit score. Plus using a credit card with benefits can also earn you travel points, cash back or discounts that can help you save while you spend.
Ultimately, being mindful about debt is a good financial goal for any year.
4. Review Your Goals
Setting goals is fun, and putting plans to reach them into action is empowering. However, there’s an extra step if you want to be truly serious about getting what you’re working toward: Check in with yourself regularly to make sure you’re on track.
Real goals can’t be put on autopilot. If you want to reach them, it’s very important to set regular check-ups to make sure you’re doing everything you need to do to get to your end point. It’s also important to see whether anything has changed that can affect your outcomes.
For example, if your goal is to save a specific amount of money in six months, factoring in interest earnings from your savings account can help you understand quicker ways to reach your target amount. But if interest rates at your bank change or another institution offers bonuses or higher interest rates, moving accounts can work in your best interest.
Checking in regularly and keeping up to date on financial information is a good way to ensure you’re always doing what’s best for your financial objectives.
Quontic Bank cannot and does not guarantee the information applicability or accuracy regarding your individual circumstances. This is not financial advice, nor should it constitute or be construed as instruction for any individual reader, or group of readers, to act or make a decision in any financial capacity. Seeking independent, professional consultation from a qualified and licensed expert is always the optimum avenue in making financial decisions. Information is accurate as of December 27, 2022 & is subject to change without notice.