The New Year is upon us and with it comes the opportunity for a financial New Year. How you manage money can change this year with some tweaks to they way you’re doing things.
Four Steps to Have A Financial New Year
1. Goal Setting
Take the time to set financial goals for the new year. Setting goals begins with a hard look at where you’re at currently. Are you happy with the state of your money life? Do you have the level of savings you want? Are you getting in trouble at work for your finances? Have you been saving for retirement? These are all questions to ask yourself to start the process of goal setting. What improvements do you want to make to your money life in the next year? By evaluating your current state, you’ll be able to see the areas to make improvements in your financial life. Also setting goals will help with the next step.
2. Make A Plan
Once you write down a list of things you want to achieve, the next step is figuring out how you’re going to make it happen. A way to start that process is to make them into S.M.A.R.T goals.
Specific is knowing what you want to achieve. For example, if your goal is saving for retirement, then being specific is saying, “I want to be financially secure in my future by saving money for my retirement.” Know exactly what you want.
Measurable means making your goals trackable, so you’ll know when it’s accomplished. Using the same example above, you would want to put a number on how much you’re saving for retirement. A goal of saving $900K would make it easier to track your progress by how much you’re saving each month. Without a measurable goal, you won’t know where you are in the process or when you’ve met the goal.
Attainable is the ability to achieve your goal by taking action steps. How will you make it happen? Is the goal within your control and do you have the capacity to make it happen? Is it possible to save $900K for your retirement? Next, look at the steps you can take to achieve saving for retirement to gauge if it’s attainable.
- Reduce spending
- Can save “X” per month in my 401k
- Saving “X” for 30 years at “X” return
- Maintain a 3-month living expense cash reserve
Setting up steps will help decide if the goal’s reachable but also it will give you an action plan.
Realistic is finding a balance between being able to achieve a goal and pushing yourself out of your comfort zone to reach for things in life. You don’t want to aim for something that is unrealistic and will only end up discouraging you. But on the other hand, you want to go beyond what you normally do.
Time is just that, a time-frame of when you want to reach the goal. Is it in 6 months or 30 years? Knowing what your deadline will help you accomplish the task.
3. Do something different
Doing the same thing will have the same result. Look at the things you want to change to have a financial New Year. If you haven’t been able to build up your savings, then adjust your spending to find extra money. If you haven’t been putting money into your IRA, then have your checking account set up to transfer money into your IRA each month automatically. This year, take a different action to get the results you want.
4. Become An Action Hero
It’s easy to think about all the things you either want or want to be different. We can all talk a good game about the things we’re going to do. The problem is a lot of people do just that talk but do nothing. There will always be an excuse you can use as to why you haven’t started doing something. The time for daydreaming and talking is over, start doing. Take action to have a financial New Year, this year.