6 Tips to Set and Achieve Your Financial Goals in 2021
Did you struggle to achieve your financial goals last year? You are definitely not alone. Plans, resolutions, goals, and dreams were disrupted across the planet in 2020 for so many. Last year was hard by nearly every measurable metric.
But it’s a new year! Which means we have another chance to set financial goals and new opportunity to think about what those goals might look like moving forward. You might be surprised that with just a little time and some strategic planning, your goals can shift from feeling impossible to being within arm's reach.
But first, what are financial goals and why should you set them?
Financial goals are the short and/or long-term goals we set for unsecure to direct our finances. They can be anything from a dollar amount we want to save over the next six months to a percentage we want to invest into our retirement.
It could even be a goal of increasing our financial knowledge or keeping track of every dollar spent. Regardless of income or the amount of money in your bank account, financial goals can help us feel more in control of our financial situation.
1. Set yourself up for success
Being ambitious is great, but sometimes setting goals too high will set ourselves up for failure. Saying you want to build a spaceship and fly to the moon in 2021 may be an interesting goal. It is definitely an exciting one! But unless you’re Elon Musk, 2021 will likely (definitely?!) end with you still on earth with your absolutely goal not met.
That same principal should be applied to our financial goals. "Make $100 million this year" or “set aside 90% of my paycheck" are both great goals - but they’re probably not realistic ones. Financial goals with too much ambition will just set us up for failure. If you go beyond your goal, you get extra credit! If you fall way below, you just feel bad. It’s best to create goals that are reasonable and achievable.
2. Know what you have to work with
A big part of setting and achieving financial goals is to first be aware of the funds you have available. In a spreadsheet or note, list your basic living costs. (Things like rent/mortgage, car payments, credit card payments, utilities, food, insurance, etc.)
Doing this will help you determine how much you spend each month on the essentials, and how much you will have left over for non-essentials, savings, investments, and ultimately what funds you have to achieve your financial goals.
3. Find a way to monitor your spending
It's important to know where your money is going. By monitoring your spending, you can catch those unused subscription streaming services before they renew and keep the coffee runs in check.
The age old "cash in categorized envelopes" method isa foolproof way of keeping track of spending, but in our increasingly digital world, putting cash in categorized envelopes seems a little like something out of the stone ages.
Thanks to modern tech, there are plenty of nifty budgeting apps you can download right onto your mobile device that will help you track and categorize your spending. They're easy to set up too!
After you securely link your bank or credit card accounts, set your spending goals/budgets, and list a few categories for your costs of living. The apps will then run on their own and do their magic. They'll send you notifications when your spending goes beyond the thresholds you set and each purchase will be categorized so you can quickly and easily track where your money is going.
A few apps we recommend:
Monitoring your spending is a necessary part of getting your finances in order. After you start, you'll probably find a few areas where you can cut back - leaving you with more funds leftover to achieve your financial goals.
4. Create supporting goals
People are creatures of habit, so setting a goal of "spending less money eating out" can be a hard one to stick to if you're used to eating out often.
But with a little breakdown and a few supporting goals, that goal can become achievable. Maybe tweak it to be "learn to cook one new meal every week", "eat out only twice a month", or "meal prep for the week every Sunday afternoon". These will all inevitably lead to you spend less money eating out thus making your primary goal that much more achievable.
5. Create a plan and stick with it
Now that you know the dollar amounts you’re working with, create a plan to help you stay consistent with your new goals.
You could get someone you trust to hold you accountable to your goals, set a weekly "checkpoint" in your calendar to check in on yourself, or set daily reminders on your phone with that day's supporting goal (i.e. "Pack a lunch for work today!")
6. Prioritize each financial goal
Label each of your goals "critical", "need", or "want", and if push comes to shove, these prioritizations can give you direction to know which one to fund first. Maybe you have a goal to pay off a lingering credit card bill, which is "critical", but you also have a goal to purchase a new car - which is "want". If money is short one month, these labels will let you know where to put your money first.
You're also more likely to keep working at something if there's a reward on the other side. Just like a cheat day on a diet, it's important to have something to look forward to. Want to go on a dream vacation eight months from now? Buy that new car? Those are great goals to work into your prioritizations!
Figure out the cost now and how much you'll need to put away each month to make it happen. You may even want to set up a separate bank account just with funds set aside for these goals - this can help you stay organized by not overlapping accounts. (You can’t blow your vacation money on a pricy coffee if that money is in a separate account!)
Having a wishlist can be a great way to motivate yourself. And the best part? By planning, you don't have to go into debt to take that much-deserved vacation.
This year you have the opportunity to set goals and reach them. Simply apply a few tips from above and you’ll be on your way to checking off each goal on your 2021 list. Whether financial goals are new to you or not, we at Starion Bank are cheering you on and are always here to give sound financial advice and a helping hand in support.