Set Financial Goals for the New Year
This year has drawn to a close. Now is an appropriate time to reflect on where you stand financially and envision where you’d like to be at the end of the next twelve months. But don’t stop there. Before you hang that brand-new calendar on your kitchen wall, take an honest assessment of your money management habits—and don’t be afraid to ask the tough questions:
What can I do better next year? What do I need to change? Am I doing all I can to nurture my family’s financial health?
Then take a deep breath and get to work.
If you’ve had problems keeping your past New Year’s resolutions, you may want to consider recasting them as goals. Rather than saying in mid-January, “Well, that’s one resolution already broken,” you can state, “Just a minor setback, but my goal is still in sight.” It’s a more positive approach to adopting new money management practices and staying focused on making wise and disciplined decisions.
Set aside time at the end of the year to get a clear picture of your current financial status. Establish objectives that are realistic, achievable, impactful, and well-defined, with specific mileposts based on actual numbers, not wishful thinking.
For example, you may want to eliminate credit card debt or pay off a student loan, but the figures staring back at you from a spreadsheet may not support your aspirations. Instead, set a goal of paying down your debt to X amount of dollars or boosting your monthly payments. Moving forward, don’t be hard on yourself when things don’t go exactly as planned. Remain flexible and celebrate the small victories along the way.
Don’t get overwhelmed by filling your financial plate with too many goals at once. Select a few and watch how making a concerted effort toward achieving them can pay dividends. Here are a handful of ideas to help you brainstorm your goal-setting agenda for 2021:
Stick to a Budget
If you have a household budget but have never been successful at keeping spending in line, this goal should be high on your list.
Exceeding your expenses in certain budget categories can set you back in others. Adhering to budgetary goals can allow you to devote money to an emergency fund or even long-neglected household projects that can add value to your home. You don’t have to be perfect—no one is—but you’ll be surprised by what you can accomplish by reining in your spending impulses.
Get a Handle on Debt
Evaluate your fixed debts and arrive at a strategy for managing them. That could mean increasing monthly payments to expedite eliminating larger debts, focusing on wiping out smaller debts, concentrating on higher-interest debts, limiting credit card purchases, or, if possible, paying off credit card bills every month. Whatever avenue you choose, you’ll feel better knowing you have a plan and a specific goal in mind.
Assess Your 401(K) Contribution
Look at your numbers to see if you can afford to boost the percentage of your paycheck committed to your 401(K) account. Determine if it’s possible to arrange your budget to increase your percentage so you can secure your employer’s full matching contribution.
Check Your Credit Report
Obtain a free copy of your credit report and check for mistakes that could be throwing a wrench in your ability to enjoy more favorable financing terms and obtain lines of credit. Fixing discrepancies, such as the same debt appearing twice on a report, could raise your score and put you closer to achieving other goals on your list.
Even if you don’t discover an error, you’ll be more informed about what’s in the report and what to look for in the future.
Learn about Your Investments
A great way to become smarter with your money is to educate yourself about your investments. What companies comprise your mutual funds? Which funds are excelling or underperforming? Could a different balance of high- , medium- , and low-risk investments yield a more favorable return? You don’t have to become an expert, but the more time you spend studying your retirement account statements, the more insightful conversations you can have with your financial advisor.
Stay in Touch
Just like scheduling annual doctors’ checkups, don’t ignore reaching out to the professionals who look out for your financial well-being, including your banker, insurance agent, investment manager, tax advisor, and others.
Having productive meetings with members of your financial team is an important step in monitoring your money. Come prepared with your list of short- and long-term goals. You’ll walk away with greater confidence knowing that you have the right people in place to guide you on your financial journey.