Money-related New Year’s resolutions are common because, often, many people want to improve their financial situation. Unfortunately, merely stating intentions like “get out of debt in 2024” or “save more money” without concrete plans is often just a wish, which is why many resolutions are abandoned by February.
That doesn’t imply that you can’t enhance your circumstances in the upcoming year. By establishing clear and achievable objectives, you can position yourself for success.
Not sure how? Just follow these simple steps.
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- Make specific goals
- Budget
- Make sure success is measurable
- Turn big goals into small ones
- Outline a plan to achieve your goals
- Have consistency and adaptability
- Avoid unattainable goals
- Seek professional advice
1. Make specific goals
An issue commonly associated with New Year’s resolutions is their tendency to lack specificity. Take the example mentioned earlier; resolving to save more money next year is a vague goal. Without clearly outlining the amount and the timeframe involved, achieving such an objective becomes considerably challenging.
Employing the S.M.A.R.T. criteria —Specific, Measurable, Achievable, Relevant, and Time-bound — brings structure and clarity to financial goals. For instance, rather than saying “save more money,” a S.M.A.R.T. goal would be “save $5,000 in a high-interest savings account by December 31st.” If you’re specific, you’ll know exactly what you’re hoping to do.
2. Budget
Budgeting offers visibility into your income, expenses and savings, which can help prioritize spending and aid in ways you can meet your goals.
Budgeting acts as a plan, guiding you to make smart financial choices and steer clear of unnecessary expenses. While nurturing a disciplined approach to savings and investments, ultimately paving the path to a more secure and prosperous financial future.
3. Make sure success is measurable
To achieve your financial goals, it’s essential to chart a clear course on a map, offering guidance and transparency. Creating measurable milestones, such as saving a particular amount or reaching a specific investment growth goal, provides concrete signs of your progress.
Having a clear understanding helps you follow your financial path effectively, giving you insights into whether you’re heading in the right direction. This improves accountability and assists in making necessary adjustments to stay on track with your goals.
Instead of saying you want to “purchase a house” in 2024, consider setting a specific goal, such as saving $500 per month for your down payment and obtaining pre-qualification from five mortgage lenders by March. That way, it’s clear whether you’re on track toward saving your down payment and researching your lender options.
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4. Turn big goals into small ones
Facing significant financial goals can feel like a big challenge. But if you break them into smaller, achievable steps, it becomes more manageable. Every small milestone you reach brings a sense of accomplishment, keeping you motivated to work toward the larger goal.
Take the goal of saving $1 million for retirement, for instance. Without a clear idea of how much to save monthly or annually, it becomes challenging. By setting smaller objectives like investing $150 per week or $600 per month, you not only experience a sense of advancement but also find your larger goals more within reach.
5. Outline a plan to achieve your goals
Once you’ve set small, specific and measurable goals, create a realistic plan to achieve them. By outlining a detailed strategy that includes these steps, you can establish a clear path toward your financial goals. This approach helps build discipline, focus and a sense of control over your personal finances, contributing to long-term financial well-being.
Suppose you’re aiming to save $500 each month for a home down payment. In that case, you might plan to treat it as a fixed bill by setting up an automatic transfer from your checking account to a designated savings account right after you get paid.
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6. Have consistency and adaptability
Balancing consistency and adaptability creates a sustainable approach to achieving financial goals. Consistent efforts lay the groundwork while adaptability allows for adjustments to navigate the twists and turns of life, ultimately leading to greater financial success and stability.
Assess whether you’re meeting milestones and staying within budget. If circumstances change, be prepared to adapt the plan accordingly. Life events, unexpected expenses or changes in income may require adjustments to your goals or strategies.
7. Avoid unattainable goals
Setting goals that are beyond your reach is a recipe for quick discouragement. Continuously missing targets each month increases the likelihood of abandoning the entire effort. However, if you establish realistic goals, understand the necessary steps, break them into manageable tasks and monitor your progress, success is more likely.
Whether you prefer to label it a New Year’s resolution for added excitement, the achievement will go beyond mere resolution.
8. Seek professional advice
Surround yourself with a supportive network or turn to professionals for guidance. Whether it’s having accountability partners, seeking advice from financial advisers or relying on supportive friends and family, their encouragement and guidance can help you stay on track and handle challenges.
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