Six Financial Goals for the New Year
The new year is the ideal time for setting new goals. The most common New Year’s resolutions are to exercise more, lose weight, eat healthier and learn a new skill or hobby. But if you’re thinking about doing something like buy a house, go on a nice vacation or anything that involves money, you might want to set some financial goals for the near year as well.
Achieving financial independence is an admirable goal, but it doesn’t happen overnight. To set yourself up for success, it’s best to set small, realistic goals to help you to achieve your larger overall goals. As you commit to changing for the better, here are some tips related to personal finance, saving and investing.
1. Set and Stick To a Budget
Get organized and start by setting an achievable budget so you can monitor and analyze how you spend your money. Go through all your expenses and make sure to account for all costs, including bills related to housing, food and utilities. This can seem intimidating at first, but the key is to plan where you will spend your money and stick to it. Consider using an app on your phone or an envelop system with cash so you will stop spending money once you reach your limit for the month.
2. Start Saving Money
Saving is an important key to financial success. Some experts say you should save at least 10 percent of your income each month, and establishing savings habits now will open the doors for what you can do during retirement. As you look for ways to cut back on expenses, consider going out to eat less, dropping certain luxuries, like a gym membership you don’t use or cable TV you don’t watch. It also helps to set a short-term savings goals and work up to larger targets.
3. Establish an Emergency Fund
The money you have in savings could go toward something big, like a new car, but you also need to plan for unforeseen emergencies. Without proper planning, your savings could evaporate and your budget could fall apart if you don’t have a safety net. Putting 2-3 months of emergency fund cash aside is always nice to have for an unexpected crisis.
4. Pay Off Your Debt
Debt is a significant burden, especially as your losing money paying interest. Commit to paying off your debts now — especially those with the highest interest rates — and you’ll be able to save and invest in the future. If you’re not doing so already, make sure to pay above the minimum payment and set up a more aggressive debt payment plan. Consider selling some personal items, reducing your spending in other areas or getting second job to pay off the debt faster. You’ll enjoy great freedom and flexibility when you’re not saddled with debt.
5. Plan for Retirement
Retirement is coming, and to be prepared for it, you need to determine exactly how much you need to retire. There are a lot of financial calculators out there to help put your savings into perspective and help you build a plan to put the right amount of money aside from each paycheck to safeguard your future.
6. Create an Investment Strategy
Investing allows your money to grow at a much quicker rate. There are many tools and ways to invest money successfully on your own, but you may consider using a financial planner to help you understand certain risks, see where your money is going, make some changes and achieve your goals.