If you hit your financial goals last year, congratulations! That’s a big win when you consider the ups and downs of the last couple years. If you didn’t, that’s OK.
It’s a new year, which means another chance to regroup and think about the strategies and habits that can lead you to fiscal success moving forward.
Your financial goals, both short and long-term, should likely include basics like setting up an emergency fund, paying off debt, and retirement investments. But there is more to life, so of course it’s OK to fund your hobbies or plan that dream vacation.
Whatever your goals, it’s important to define them and then develop an actionable plan to reach them. Here are some helpful techniques that can help put you in control of your financial situation.
Setting goals - however big or small - is exciting. But it’s also important to stay grounded and not set yourself up for failure before the year begins.
Setting yourself up for success starts with writing down goals that are within your means. Enthusiastically scribbling “save 50% of my paychecks” sounds good, but it’s not feasible if your basic expenses (things like food, shelter and transportation) already use up most of your salary.
If you write down “spend less money at restaurants,” leaves a lot of room for interpretation. It’ll be hard to determine whether you actually accomplished that goal. Setting a $25 weekly limit on restaurant food is more specific. You will know for sure whether you hit that each week.
Making goals with real numbers helps you track your progress in budgeting apps, too. There is a little more upfront work in setting the goals and categorizing expenses, but the result is that you’ll always know where every dollar went.
To truly know your results at the end of the year, your goals need to be measurable and specific.
Go through your list of goals and rank them by importance. You can list them in order, top to bottom, or choose descriptive labels like “critical” or “nice to have.” Maybe in your situation a new car is a “critical,” whereas that trip to Tahiti “would be nice.”
This list gives you direction as to where your money needs to go, and helps you adjust as needed if your original plan seems unsustainable.
Once you know your goals, it’s important to establish a baseline. Using a spreadsheet or a simple sheet of paper, list your current recurring living expenses. This should include rent or mortgage, credit card payments, car loans, utilities, food, insurance, entertainment, and anything else you currently spend monthly.
This exercise gives you a fuller picture of your expenses and where you might be able to shave off a few dollars. And it more clearly shows what you might have leftover each month that can be allocated to savings, investments, or into that “would be nice” fund.
Are you still paying for streaming services you don’t watch? What did you spend on coffee runs last year? If you don’t know, now’s a great time to figure it out!
Of course, the old “cash in categorized envelopes” trick works, if you want to try it. But in our increasingly digital world, it’s more inconvenient than clever.
Nearly everyone has a cell phone that can run user-friendly budgeting apps. They allow you to securely link your debit and credit cards, set your goals and budgets, and categorize expenses. If you get close to a limit — or accidentally overrun it — you’ll get notified so that you can correct course quickly and get yourself back on track.
Thanks to modern technology, there are plenty of available apps with tracking and alerts, and account integration. Below are a few suggestions, but you can also check your favorite app store and do research on features, reviews, and pricing.
Set up weekly check-ins with yourself. Maybe set a calendar reminder on the same day each week to go through your expenses and savings to make sure you stay on track. Finding and fixing problems early in the year gives you a better chance of reaching, or even exceeding, your annual goals.
You’re more likely to build a healthy habit if there is a fun reward on the other side. And it’s important to have something to look forward to, especially if the reward is a direct result of meeting your goals.
Paid off your last student loan? Ready to buy tickets for that dream vacation? Celebrate! Enjoy the success, and then look forward to the next year knowing that you have the discipline and know-how to smash your financial goals year in and year out.
Your financial goals, both short and long-term, should likely include basics like setting up an emergency fund, paying off debt, and retirement investments. But there is more to life, so of course it’s OK to fund your hobbies or plan that dream vacation.
Whatever your goals, it’s important to define them and then develop an actionable plan to reach them. Here are some helpful techniques that can help put you in control of your financial situation.
1. Set yourself up for success
Setting goals - however big or small - is exciting. But it’s also important to stay grounded and not set yourself up for failure before the year begins.Setting yourself up for success starts with writing down goals that are within your means. Enthusiastically scribbling “save 50% of my paychecks” sounds good, but it’s not feasible if your basic expenses (things like food, shelter and transportation) already use up most of your salary.
2. Be Specific
If you write down “spend less money at restaurants,” leaves a lot of room for interpretation. It’ll be hard to determine whether you actually accomplished that goal. Setting a $25 weekly limit on restaurant food is more specific. You will know for sure whether you hit that each week.Making goals with real numbers helps you track your progress in budgeting apps, too. There is a little more upfront work in setting the goals and categorizing expenses, but the result is that you’ll always know where every dollar went.
To truly know your results at the end of the year, your goals need to be measurable and specific.
3. Prioritize your goals
Go through your list of goals and rank them by importance. You can list them in order, top to bottom, or choose descriptive labels like “critical” or “nice to have.” Maybe in your situation a new car is a “critical,” whereas that trip to Tahiti “would be nice.”This list gives you direction as to where your money needs to go, and helps you adjust as needed if your original plan seems unsustainable.
4. Know your budget
Once you know your goals, it’s important to establish a baseline. Using a spreadsheet or a simple sheet of paper, list your current recurring living expenses. This should include rent or mortgage, credit card payments, car loans, utilities, food, insurance, entertainment, and anything else you currently spend monthly.This exercise gives you a fuller picture of your expenses and where you might be able to shave off a few dollars. And it more clearly shows what you might have leftover each month that can be allocated to savings, investments, or into that “would be nice” fund.
5. Monitor your spending
Are you still paying for streaming services you don’t watch? What did you spend on coffee runs last year? If you don’t know, now’s a great time to figure it out!Of course, the old “cash in categorized envelopes” trick works, if you want to try it. But in our increasingly digital world, it’s more inconvenient than clever.
Nearly everyone has a cell phone that can run user-friendly budgeting apps. They allow you to securely link your debit and credit cards, set your goals and budgets, and categorize expenses. If you get close to a limit — or accidentally overrun it — you’ll get notified so that you can correct course quickly and get yourself back on track.
Thanks to modern technology, there are plenty of available apps with tracking and alerts, and account integration. Below are a few suggestions, but you can also check your favorite app store and do research on features, reviews, and pricing.
- Mint: This app offers everything you need for money management– budgeting, expense tracking, alerts, and it can even connect to financial institutions like Starion Bank.
- Pocket Guard: A planner for budgeting, bill payments, and debt payoffs.
- Good Budget: Think of it as the “envelope method” but digital and more secure.
- Personal Capital: All your accounts in one place – bank, stocks, retirement, etc.
- Starion Bank: Our mobile app lets you set up alerts for spending and milestones. Give it a try!
6. Stay Accountable
Setting up the goals, establishing a budget and finding the right tools to keep you on track is the easy part. Now you must keep it up and keep yourself accountable.Set up weekly check-ins with yourself. Maybe set a calendar reminder on the same day each week to go through your expenses and savings to make sure you stay on track. Finding and fixing problems early in the year gives you a better chance of reaching, or even exceeding, your annual goals.
7. Reward Yourself
You’re more likely to build a healthy habit if there is a fun reward on the other side. And it’s important to have something to look forward to, especially if the reward is a direct result of meeting your goals.Paid off your last student loan? Ready to buy tickets for that dream vacation? Celebrate! Enjoy the success, and then look forward to the next year knowing that you have the discipline and know-how to smash your financial goals year in and year out.
