When you want to change your financial picture, you need to start by setting financial goals. And what better time than the New Year to start making changes in your life and creating new financial habits?
Start by setting goals with small attainable steps or short-term goals that will help you move toward your larger financial goals. It’s also important to take time throughout the year to monitor your progress towards reaching your goals. Consider these four financial goals this New Year.
Goals to Help You Gain Control of Your Budget
Getting control of your budget is the first step in taking control of your finances. If you are not tracking your spending and spending less than you earn, then you cannot achieve your other financial goals.
A budget will make it easier to change your financial habits because it will help you recognize the things you need to change. As you set goals in other areas of your life, be sure that you budget for them, as well. This will prevent you from blowing your budget with your resolutions.
Tips as You Set Your Budgeting Goals
- As you work on your budget, be sure that you are including all of your expenses, including paying off debt, utilities, and building an emergency fund.
- It helps to start with what you usually spend and then find ways to cut back on your spending. If you randomly choose to budget $400 for groceries but usually spend $800, you may have a hard time sticking to your budget.
- Setting up a budget that works may take a few months to complete.
Goals to Help You Get Out of Debt
Getting out of debt is the second step in changing your financial picture. Learn what you can do to set up a debt payment plan that will speed up the process, and ways that you can find more money to apply to your debt. As you reach milestones in the process of getting out of debt, you may want to reward yourself to help you stay motivated throughout the year.
Tips as You Set Your Getting Out of Debt Goals
- Start with an emergency fund. This will stop you from using a credit card to cover emergencies or unplanned expenses.
- Get a side gig to make some extra money to knock out your smaller debts quickly.
- Consider taking on a second job or cutting back on your spending in order to find more money for your debt payment plan.
Goals to Help You Increase Your Savings
Saving and investing your money is important if you truly want to begin building wealth. You need to set savings goals that you can reach in a certain amount of time. Create a monthly budget and stick to it, and be sure to tuck away money each month into savings. You also may consider a spending freeze to temporarily jump-start your savings.
Tips for Your Savings Goals
- Give yourself a timeline and a purpose for your savings goals.
- Try mini savings challenges like a spending fast or saving extra money in a specific category for a month.
- Consider opening a savings account at a different bank to make it harder to access your savings.
Goals to Help You Save for Retirement
Your retirement savings should be considered separately from your other savings goals. Your retirement savings are essential because it directly affects how comfortable you will be when you reach retirement.
You may want to continue investing in retirement even if you are not out of debt. If you invest up to your employer’s match, then focus the rest of the income towards getting out debt, you can work toward both goals simultaneously.
Tips to Help You Save for Retirement
- Raise your contributions each time you get a raise. This way you will not miss the money.
- Work toward saving fifteen percent of your income for retirement. You can save in your 401(k) and in an IRA plan.
- Be sure your investments are well-balanced for your stage of life. They can be more aggressive when you are younger but should be more conservative as you near retirement.