Setting Financial Goals for the New Year

It’s that time of year again! Time to think about setting financial goals for the new year. And while this isn’t the only good time to set goals a new year always feels like a clean slate so why not take advantage of that.

I am by no means an expert in financial planning and have made many mistakes along the way. But I have been married for over 40 years and have raised 8 children so I do have a few things I think I am qualified to share. Especially if experience counts for anything.

Setting Financial Goals

-Set Goals for the Year
Write down your Top 5 financial goals for the new year.
Ask yourself what you want to accomplish.
Short Term Goals (1-3 months)
Mid Term Goals (3-9 months)
Long Term Goals (9 months-year)

-Create a Budget (and stick to it)
Write down all your debts and the balance on each.
Break it down into monthly payments.
Record everything from housing to fast food to find where your money is really being spent.
If bills are owed quarterly, every 6 months or any other way break it down to monthly payments.
Start with the most important debt at the top and work down to least important.

-Start Saving (no matter how small)
I shared a few ways to save for Christmas in this post and these ideas can also be used for regular savings.
Open a Savings Account with as little as $25 at most financial institutions.  You can also open different saving accounts for different things to keep your money separate.
Start with as little as putting extra change in a jar if that is all you can do right now (it can add up).
Just get started!

-Pay off Credit Cards
Start with one credit card and pay extra on it until it is paid off then move on to the next one.
Take the money from the paid off credit card and move it to the next. Then keep adding to the next card until they are all paid off.
If you have really high interest on a card see if you can have it lowered or move it to a lower interest card.
Paying off credit cards will give you more cash in your pocket with no interest.

-Spend Less (practice being frugal)
You don’t need to go as far as a spending freeze but be aware of where you are spending and make better choices.
Delay gratification a bit. Take a few days to decide if you really need something.
Distinguish Wants vs Needs
Shop around for insurance
Shop the right time of year for household items and large purchases
Avoid ATM fees by going to your financial institution or an associate ATM

-Get a Month Ahead (live on last month’s income)
This may take a while but by spending less and practicing some of the ideas above you should be able to be a month ahead in a few months.
This gives you a cushion of at least a month if an emergency or something else happens.

-Create an Emergency Fund
Save 3-6 months for an emergency (this may take up to a year)
Open a separate savings account for your emergency fund

-Invest
Once you have met your other goals you can start investing to make your money work even better for you.
I don’t have a lot of knowledge about investing but a Credit Union or other financial institution would be happy to help you.

-Give Back
I feel strongly about giving some of what I have.
Even through lean times there is always someone else in greater need.
Donate to a local charity, to your church, or find a family to help.

Now is where I get a little personal. I try not to get personal too often but when it’s something I think you will benefit from I like to share. A few years ago we went through some very lean times. My husband was laid off 3 times in about 5 years. Just when things were starting to look up they seemed to come crashing down again. We also had some pretty large medical bills at the time.

But I learned a few things from the 1st time being laid off to the most recent. We knew what to expect as far as loss of income so we were a lot more prepared the next time.

Let me share with you what I learned and what we did differently so we weren’t in as bad a place as we were the first time:

1- We were living well beneath our means.
2- I had a boost in my income and was able to work a little more for more income.
3- We had already paid off some of our credit cards.
4- We sold some things we didn’t need.
5- We have a better attitude.
6- We didn’t make purchases unless there was a real need.

Money isn’t going as far as it was a couple years ago. I think most families have felt it in their wallet lately. Even though we are in a good place financially right now we are still taking into account that things can change. And a lot of times it does. It’s good to revisit your financial goals and budget about every 3 months. Make adjustments where it’s needed to plan the best for your future.

I hope my experiences and tips will help you while you work on your own financial goals.

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