New Year’s is often the time many of us opt to set resolutions for the coming year. It is an ideal moment to reconsider financial aspirations and implement changes to achieve desired outcomes, be it debt settlement, accruing an emergency fund, or saving for the future. Financial goals may vary from person to person, and successfully laying them out is just the inception. The real challenge arises when it’s time to figure out how to realize these goals.
Are you interested in establishing enduring financial resolutions? If yes, then remember to incorporate a certain degree of specificity in your goals.
What exactly are financial goals though?
They are defined as savings, investment, or spending aims you aspire to accomplish within a specified timeframe. Your life stage typically influences the kind of goals you strive to hit. Here are four tips for setting and achieving your financial goals:
1. Know Your Current Status
Determining your financial standing is crucial before you can plot any goals. Review your savings, debts, and investments. Understanding your financial state might be tedious, but it’s indispensable for setting your achievable targets for the upcoming year.
2. Pinpoint Your Desires
The toughest part of goal setting is identifying your actual desires. Make sure the financial goals you’ve set align with your true aspirations to prevent the goal-setting phase from becoming overly stressful. Choose a few goals to focus on at a time to avoid overwhelming yourself and losing focus.
3. Smart Goals are Key
Adopt a SMART (Specific, Measurable, Achievable, Relevant, and Timely) strategy when setting up your goals. It’s much easier to make headway towards a goal that meets these criteria. Break down significant goals into miniature ones with shorter timelines and six-month milestones to monitor your progress better. Ensure you differentiate your short-term, mid-term, and long-term goals and set appropriate timelines.
4. Keep Up With Your Goals
Once you’ve outlined your financial goals, it’s time to actualize and track them. A Certified Financial Planner (CFP) or financial advisor can guide you in selecting goals that suit your circumstances and give financial planning advice. Keep track of your progress and adjust as necessary.
To help you get started on your financial goal-setting journey, here are a few common financial objectives most people consider:
1. Create a Budget: Experts agree that a well-defined budget aids in meeting spending and savings aims.
2. Build an Emergency Fund: Having at least three to six months worth of cash saved up to cover regular expenses is generally recommended by financial experts.
3. Become Debt-Free: Paying off debt is a step towards financial liberty.
4. Save For Retirement: Prioritize saving for retirement by opening accounts such as an IRA, Roth IRA, a 401(k), or an HSA.
In conclusion, formalizing and achieving your goals is an exhilarating journey. You will be amazed at what you can accomplish once you are clear about what you want and have timelines to guide you. Sticking to your financial goals and refreshing them when required is just as important as setting them.
It’s now time for you to ponder – what are your financial goals for 2022?
