Setting Financial Goals for the New Year
The start of a new year is a good time to dream big and set new goals. Here are three fundamental steps to think through as you begin a fresh start in 2017.
Step 01: Set concrete goals
One of the best ways to build wealth and ensure long-term financial security is having clearly defined objectives and a game plan to pursue them. For example:
- Purchasing your first home or a vacation property
- Having enough money to retire comfortably at a specific age
- Setting money aside to start a business
Envision what’s important in your own life and put a timeframe and priority on those goals. Next, consider the amount of time available for you to save for each goal and how much money will be required. Having a formalized financial plan can help you see how you’re progressing toward multiple goals over time.
Step 02: Match your spending to your goals
The decisions you make with your money every day can make an impact on your long-term goals. Evaluate your typical spending pattern. How does your spending relate to the goals you established in step one? As you evaluate, consider the following questions:
- Are there ways to run your household more efficiently?
- Do you know how much you’re spending on your children’s education, activities and daily needs?
- Are you mindful in making little purchases each day or week?
- Are you strategic in how you pay down student debts, borrowing or your mortgage?
- Do you make impulse purchases without carefully considering how these items fit with your long-term goals?
For 2017, try evaluating your spending every few months. Doing so will allow you to stay on track with achieving your goals.
Step 03: Boost your savings
The most important way to improve your long-term financial position is to begin saving more and doing so consistently. Here are some specific points to consider:
- If you can participate in a workplace savings plan, you should do so. If your employer offers matching contributions, make sure you save enough to take full advantage of that valuable benefit. If you already participate in a plan, consider boosting your savings.
- Build up your emergency fund, cash that is easily accessible in a bank or money market account, so it matches at least three-to-six months of your income.
- Consider opening an IRA to build up personal retirement savings in a tax-advantaged way.
When setting goals for the new year, many of us forget to consider the financial side of those goals. Think about how you’ll feel when you reach one of your goals, and then how it will feel to be right on track financially for your next goal. That feeling should inspire you to get started goal planning today.