In anticipation of a new year, many people begin creating a list of goals and aspirations they would like to accomplish in the next twelve months. Common resolutions are making healthier diet choices and exercising more, acquiring a new skill, or building up savings for the future. While we all start the year ready and motivated, many times our motivation takes a nosedive as other priorities set in.
Does this mean setting financial goals each year doesn’t work? Goal setting is very important; it just may require you to switch up how you approach the process to be successful. Choosing short-term, attainable goals can help keep you motivated and allow you to reach the finish line one step at a time. So as January arrives, here are several actions you can plan for immediately that can help improve your financial life.
The financial accomplishments you would like to achieve within a month or less are called your short-term goals. Oftentimes, you can set several short-term goals that all support a larger, long-term objective. For example, if you wish to pay off your car by the end of the year, you could break it down into several, smaller goals. This could include creating a separate savings account, setting up automatic monthly deposits, and reviewing your budget to eliminate unnecessary costs that could help put money toward making larger car payments.
By setting bite-size tasks, it could boost the potential of reaching your financial goals, leading to feelings of accomplishment and may inspire you to keep going in the months following. Progress can be easily measured and every small action could have an incredible impact on your overall financial well-being. Make sure to set deadlines for each smaller goal in January and focus on the targets one at a time. As you reach each milestone, move on to the next. This can make financial goals much less overwhelming and puts you in a better position for success. Here are several short-term financial goals to add to your list for January and helpful tips for achieving success.
Everything in your financial life stems from your budget and using this plan effectively can be key to accomplishing your goals. If you do not have a budget in place, set that as a goal for January. Whether you choose an online app, a spreadsheet, or pen and paper, enter your monthly income and expenses and take a closer look at your spending and saving habits. Is there at least one non-essential expense you could cut? Could you move a few things around to put more dollars toward savings? Taking time to set priorities and expectations for the month using your budget can help keep you on track for the rest of the year.
Your end-of-year expenses and holiday spending may have dipped into your savings, but as a new year begins, it’s time to refill the pot and be better prepared financially. Add a savings category to your monthly budget to hold yourself accountable and easily keep track of your progress. If you do not have an emergency fund or need to rebuild a current reserve, you may want to make this goal a priority. Being prepared financially for an emergency can help lower the strain when a stressful event occurs. Try breaking down your saving goals into smaller tasks so as you make short-term achievements, you’ll stay motivated to keep moving forward.
Debt continues to be a financial challenge for many families, with the average household in the U.S. facing $9,260 in credit card debt. Especially after a potentially expensive holiday season, you may have had a big jump in your balance. To get back to zero and start the New Year off right, add this strategy may be your short-term goals for January. Look at your budget and see where income could be allocated to paying down debt instead. Could you forgo ordering take-out for the month or eliminate a streaming service and put that money toward your credit card balance? Is it possible to set up a work carpool, helping to put money you normally spend on gas toward your debt amount? By incorporating small changes each week, you can help lower the outstanding balance, and feel more and more encouraged as your total debt decreases.
To get yourself on the right track to achieving your goals, meeting with your financial professional can help make sure your current strategy is still in line with these objectives. You can make updates if needed and devise a game plan for the specific goals you’ve set for this year. Since goals from year to year may differ, giving your financial plan an annual refresh can be very beneficial. You may be able to eliminate goals, revise the timeline for others, and add new ideas you wish to accomplish. If you do not have a financial professional, finding an agent is an excellent goal for January. Seeking guidance and professional advice can help lower stress about your financial situation, simplify more complex topics, and reveal financial opportunities that you may not have been aware of yourself. Your financial professional can also be a valuable resource as you create your smaller, short-term goals and how they can act as stepping stones in your overall financial roadmap.
Short-term saving goals are similar to your other short-term financial goals, where your target date falls within a month to a 3-month window. Perhaps you would like to buy a new car, save for a family vacation, or start an emergency fund. You can set short-term saving goals specific to your budget and choose one or more goals based on your financial situation. You may decide a new car is the highest priority and choose to focus on funding this goal for January. A general rule is to save 10 to 15% of your paycheck each pay period toward your saving goal. If that is not feasible, take a look at your budget to find an amount that makes the most sense or see if you can make any changes that would free up that portion of your income.
Along with working your saving goals into your budget and cutting expenses, you may also consider opening a high-interest saving account through an online bank. These accounts often let you earn more interest than traditional accounts, helping each dollar you save to go even further. Another tactic includes setting up automatic contributions where a specific amount is transferred from your checking to your savings account each month. Once set up, you won’t have to worry about setting aside that amount or accidentally spending it on something else.
The start of the year offers a great opportunity to hit the reset button and replace poor financial habits with healthier ones. When it comes to your resolutions and financial goals, remember that small victories are worth celebrating. Even if you have a long list of what you’d like to accomplish this year, it does not need to be achieved all at once, and focusing your attention on smaller, more attainable tasks may allow you to hit your targets on time. Slow and steady often wins the race and this approach will allow you to establish a pace that is sustainable all year long, instead of setting goals that cause you to quickly burn out and give up early on.
As you create your list of financial resolutions, assign one or more goals to each month. Since the amount of each saving goal will likely vary, indicate the total amount needed for the particular month and how that will work into your budget. Keep in mind that financial planning is fluid and you can always make adjustments based on life events, emergencies, or financial setbacks. If you need to switch to a smaller savings goal during a tougher month, permit yourself to do so. One of the most helpful ways for staying motivated is keeping a positive attitude and being proud of every step you take to improve your financial life.
When you set financial goals and decide to make positive changes, you may begin to gain a healthier money mindset and bring favorable financial habits and greater accountability into your life. Approach your long-term goals by breaking them down into smaller ones which may allow you to take incremental steps in the right direction. If you’re looking to create a retirement fund or want to provide financial protection for your family through life insurance, setting a goal of researching these topics can be a great first step to accomplishing these larger goals. Assigning monthly action items can prevent your resolutions from fizzing out and give you the momentum you need to reach your goals successfully.