At the beginning of every year, people set a variety of New Year’s resolutions, often relating to health and fitness. Another equally important area to set resolutions in is your finances. By continually setting New Year’s resolutions for your finances, you can start to live a more financially free life. Here are some tips for setting financial goals for the new year:
4 Tips for Setting Financial Goals for the New Year
Set a Budget
The first thing you should do every year is set a budget… and stick to it! Although many people have a budget in their mind, but they don’t hold themselves accountable for their spending. Your budget is nothing if you don’t actually follow it. So, start by making a budget based on your current and prospective income and find a way to hold yourself responsible.
Any specific goals you set in your budget, make sure they are SMART goals. SMART is an acronym for:
- S: Specific
- M: Measurable
- A: Achievable
- R: Relevant
- T: Time-bound
By setting SMART goals, you are more likely to follow through with them. That’s because these goals are actually quantifiable and tangible. When goals are too abstract, it is nearly impossible to follow through. Ensure all financial goals are SMART to keep yourself motivated.
Short vs Long Term Goals
As you are thinking about your goals, remember that you need to have both long and short term goals. Short term goals are things like paying for bills or anything else within the immediate month. In contrast, long term goals can be within the near future or years down the line.
Pay Off Debts
Even though credit is essential to living in modern society, it comes with a downside: debt. Be sure to incorporate paying off your debt into your goals. Even if the debt feels insurmountable, it is better to at least make a little dent than ignoring it completely.
If you don’t know where to begin with paying off your debt, you can consult The Dave Ramsey Show. Even though this podcast covers a wide range of personal finance tips, Dave Ramsey is especially known for his approach to getting rid of debt. This will give you a pretty basic understanding to how you should approach your debt issue.
Pay For Your Dreams
Setting money resolutions is not always a negative thing. This year, try to approach your New Year’s financial resolutions with a lot more optimism and positivity. One of the best ways you can do this is to find ways to pay yourself back for all your hard work. In other words, pay for your dreams.
Do you want to finance a vacation on your own? Buy a new computer? Think of anything that you want to reward yourself with. This will give you something to look forward to with your dreams, and it will teach you good money management habits.
Setting Financial Goals for the New Year: Conclusion
Start off 2021 correctly by taking a new approach to finances and setting financial goals for the New Year. To master your personal finances, be diligent in your savings and spending, but don’t forget to treat yourself too. Just like everything else in life, smart financial habits are often based on moderation.