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It’s great to spend time reflecting on what you accomplished (and what you didn’t) at year’s end. And it’s natural to contemplate what you hope to do better next year. Unfortunately, New Year’s resolutions are not always successful. If you want to make great strides toward achieving your financial goals in 2017, you’ll want to really think hard about what you hope to accomplish. Here are our budgeting tips for how to approach your financial goals in the year to come.
Set Goals, Not Resolutions
Resolutions include decisions like vowing to lose weight, save more money, or pay off debt during the year. They are vows to do better in certain areas. Goals are much more specific and different than resolutions. Sure, you can have a goal to lose weight, save more money, or pay off debt, but unlike resolving to do something in the New Year, goal-setting should be more detail- and action-oriented.
Take a look at your situation and look inward to determine what you want. There are budget calculators and other great resources online, such as savings calculators and cash flow analysis calculators, to help you determine what kind of savings are realistic for you and what kind of cash flow you might expect, given your situation. Take advantage of these tools when you decide what your specific financial goals are. And seek out the advice of a financial advisor for guidance and financial planning assistance to help you meet your goals.
Create SMART Goals
Good goals are SMART. According to the Massachusetts Institute of Technology (MIT), SMART stands for “specific, measurable, achievable, relevant, and time-bound.” The most important of all of these is “measurable.” For example, losing 20 pounds, saving $1,000 in a savings account, or paying off a certain dollar amount of debt are all goals that you can check off once they are accomplished. Resolutions like “spending less” or “saving more” aren’t easily measured. So it’s very difficult to know when or if you have achieved success.
You can always make your goals more attainable and realistic by recognizing what you’ve been able to achieve in the past and being realistic about what you are able to achieve in the future. To make your goals SMART, keep in mind that they should be time-bound. If you don’t set a timeline for reaching your goals, there will be no sense of urgency to achieve them.
Reward Yourself for Progress
Setting SMART financial goals is not always enough. Another way to keep yourself motivated to stay on track is to set up a rewards system for yourself. For example, if your goal is to save $1,000, perhaps you can reward yourself with something small for each month that you hit your savings milestone. You could treat yourself to a coffee, a bouquet of fresh flowers, or some other small token of acknowledgement for your progress. Having a rewards system in place keeps you working hard even when things get tough and you want to quit or take it easy.
Have a Solid “Why”
Finally, and most importantly, you need to have a solid reason for why you are working so hard. If there’s nothing driving you to save money or pay off debt, even a rewards system won’t be enough to keep you motivated throughout the year. Your “why” should be something you’re passionate about, like buying a house, going on a vacation, getting a new car, or something else entirely that matters to you, personally. The point is that it needs to be a big priority in your life, so you stay motivated.
Essentially, it’s relatively simple to make great strides toward achieving your financial goals in 2017. You just need to be very specific about the goals you set and make a detailed plan for how you will achieve them this year. Good luck and happy New Year!
Our CFS* Financial Advisors are here to help you get started by assessing your current financial situation and identifying your financial goals. For a complementary consultation, email firstname.lastname@example.org, call (512) 997-2367, or contact a CFS Financial Advisor online.
* Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. UFCU has contracted with CFS to make non-deposit investment products and services available to credit union members.