Setting Financial Goals for the New Year
Setting goals and making financial plans is important and the start of a new year is a great time to do it! As 2020 arrives, it’s a good opportunity to sit down and make a money plan for the next twelve months.
Everyone should have a budget, financial goals, and a plan for how to achieve them. No matter what you earn or what position you’re at in life, it’s important to track and plan your money. Now that the new year is here, take some time to think of what your plans will be. Here are some tips to get you started.
Review the Last Year
Before you start setting new goals for yourself, it’s a good idea to look at what happened over the previous twelve months. You may want to start by going over your spending for the year. If you tracked how much you spent, use those records. However, even if you didn’t, you can gather a lot of information from looking at your bank and credit card statements.
Does anything surprise you about your spending? Are there areas where you spent much more than you expected? Are there things you have no memory of buying? Would you consider the money you spent on non-essential items to be spent wisely or wasted? Looking at your spending and asking yourself these questions can help you set new goals and create a money plan for the new year.
Make your Goals SMART
You’ll want to make sure you set SMART financial goals. This doesn’t mean that your goals should be intelligent (though they probably should be). SMART stands for “Specific, Measurable, Attainable, Realistic, and Timely.” An example of a SMART goal is instead of saying “I want to save more money this year,” you could say “I want to save an extra $100 every month between January and December.”
- This goal is specific: You want to save $100 a month, rather than just save “more money.”
- It’s measurable, since you can easily look and find out if you’ve put $100 into your savings account each month.
- It’s attainable for most people, while saying something like “I want to save $2000 each month” is likely too far out of the reach of many.
- It’s realistic because it’s a straightforward goal and one that matters to you.
- It’s timely since you plan to save $100 in each month, starting in January and ending in December. You’ve put a timeframe on your goal and a deadline for when you hope to achieve it.
SMART goals tend to be more successful than abstract ones. Since you can track them, and since they make sense for your lifestyle, you’ll be more motivated to work towards them and you’ll be able to see if you’re achieving them. If you set goals that make it tough to track your success, or goals that are too difficult, you’ll be much more likely to give up. It’s good to have ambitious goals, but it’s a bad idea to have unattainable ones.
Come Up with a Way to Track Your Goals
Once you have your goals, it’s important to track your progress. This will help you see if you’re achieving your goals, falling short, or if you need to modify your plans. You might want to track everything by writing down what you spend in a notebook, you might prefer to use a spreadsheet on your computer, or you may be more interested in tracking things with an app on your phone.
Pick a method that is convenient for you and that you’re likely to stick with. If you decide to try something that’s difficult or annoying, it will be a lot less likely that you’ll stick to it and, if you’re not tracking your progress, it becomes more difficult to achieve your goals.
Determine Your Motivation
When you have your goals in place and have created a way to track them, you’ll then want to come up with a plan for how you will motivate yourself to keep going. Some people like to write down or print out their goals and hang them in a place where they will see them often (such as on the door of your bedroom closet, for example). Seeing your goals regularly will help you stay motivated.
You may also want to come up with some rewards for yourself if you reach certain milestones. For instance, if you want to save $100 each month, and you’ve managed to do that for the first six months of the year, give yourself a little treat to celebrate your success. This is a good way to reward yourself and the motivation will help you keep going.