5 Financial Goals for the New Year
The new year is here! Now is the time to create financial goals to help you get on track and set yourself up for a more financially stable future. Sometimes getting your finances organized can be a daunting task, but by setting a few yearly goals, it can be easier than you think. Start the year off right by getting started on the five financial goals listed below.
1. Draft a Monthly Budget
Even though this may seem like a common goal, many people find it hard to complete this task and stick to it. A monthly budget is the beginning of gaining better control of your finances. When creating your budget, make sure that every penny is accounted for including savings, investments, clothing, food, entertainment, etc. Because the more detail you have, the better. It will not only help you realize what you spend each month, but it also will help direct your focus on areas where you can improve and goals you can set for the extra money you may have when sticking to your budget.
2. Take Control of Your Debt
Debt can be one of the primary factors that can hold you back from financial success. Make a reasonable plan to reduce your debt and stick to it. You can start by determining a reasonable amount of debt that you would like to reduce for the year, making sure that the goal is attainable. Next, determine how much you will need to pay each month in order to reduce your debt by the goal amount. Finally, look at your budget and find a way to pay this amount each month, even if it means cutting back on other areas of your spending . And make sure that you do not add any more debt throughout the year!
3. Make an Emergency Fund a Priority
Medical costs, major vehicle repairs, job layoffs, or house maintenance can quickly derail a budget. You should make sure that you have a fund set up specifically to handle these unforeseen expenses, so you don't have to alter your monthly budget to accommodate them. A good rule of thumb for an emergency fund is to start with three times your monthly pay or salary. Once this goal is achieved, you should keep saving until you have about six months of expenses covered. Make your emergency fund a line item in your budget so that you are constantly adding to it. It is always better to be safe and prepared, than sorry.
4. Prioritize Retirement Savings
It is essential to realize that the sooner you begin saving for retirement, the more time your money will have to grow and the more money you could potentially have. If you are lucky enough to have an employer sponsored retirement account, contribute at least enough money to get the company match. This is considered "free money," so take advantage of it. If you do not have a retirement plan available through your workplace, consider funding an IRA or a Roth IRA. There are countless ways to fund an IRA so you may want to consider speaking with a financial professional to determine the best course of action for your unique situation.
5. Create a Long-Term Financial Plan
Goals can be more difficult to set if you are having difficulty envisioning the rewards that will come with financial stability. Consider any long-term financial goals you may have such as buying a new house or retirement. Draft out a plan that includes savings, investing, and other ways to build up the money you need to achieve these goals. You can start with smaller goals, so they seem less daunting. Having a plan in place will help you stay on track and guide your financial decisions.
Use these steps to make this year the year you take control of your finances and get on the right track to achieving your future goals!
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