If your New Year’s resolutions rarely last until Valentine’s Day, this might be the year to stop “resolving” and start setting goals.
What’s the difference?
“I’m going to be healthier” is a common resolution. It begs the question, “How?” Folks who can’t answer that question usually get frustrated and abandon their resolutions before they start.
On the other hand, “I’m going to jog one mile three days every week” is a goal. You can track it on a calendar. You might even start measuring it by recording your times and noting improvement. And if you hit your three days of weekly jogging goal, the end result? You’ll be healthier!
Your financial goals for the New Year are no different. This four-step process will help you track and celebrate your progress towards a prosperous 2020.
1. Set your priorities.
If you haven't figured out what your goals are, start by taking the Return on LIfe assessment - this five minute quiz will give you some insight into what areas of your life could be improved. Once you've discovered some areas, get specific.
“I want to save more” is one of those financial goals that sounds better than it really is. The problem with it? Not specific enough. Remember to make your goals SMART: Specific, Measurable, Attainable, Relevant, and Time-based.
Drill down a little deeper, and you’ll come to a question: “What do you want to save FOR?”
Make a list of your saving goals for the year ahead, such as:
- Home upgrade
- New car
- Max retirement account contributions
- Kids’ college fund
- Family vacation
Now, rank those goals in a way that’s meaningful to you. One metric you might use is how close that goal is on your timeline. If you have a house full of teenagers, you might want to weight your monthly savings towards college. If you’re turning 60 this year, ramping up your IRA catch-up contributions might be the priority.
Finally, be realistic about what you can accomplish and what will make you feel satisfied at the end of the year. Feel free to give us a call and chat about whether it will be more effective to spread your savings across 5 or 6 goals, or to really focus on 1 or 2 top priorities.
2. Personalize your goals.
Things matter more to us when they are personalized and fun. Anyone can go on a “Family Vacation.” But “The Jones Family Theme Park World Tour” is a goal that you’ll be more excited to save for. A well-named goal will create a picture in your mind that you’ll look forward to realizing.
For a little extra personalization, many banks now let you name your accounts anything you want, right from their apps or online portals.
“Savings Account 2?” Yawn.
“Backyard Swimming Pool Fund?” That’s an account you’ll be happier swiping to every month.
3. Automate and track your progress.
You’re probably already making automatic contributions into IRA and 401(k) accounts. It’s easy to set up automatic saving contributions as well. If you pay yourself first as soon as you have your paycheck, your savings goals aren’t going to get lost in the bustle of balancing your monthly budget against extra spending.
Tracking your progress can be automated via any number of banking and personal finance apps. But personalizing this process can be rewarding as well. Watching your numbers grow in a spreadsheet you update or a favorite notebook can really add to your sense of accomplishment and keep you motivated.
4. Celebrate along the way.
It's important to save, but just as important to enjoy the journey along the way. Remember to celebrate your successes as you work towards your final goals.
Pay off a big chunk of debt? Treat yourself to a massage.
Have you made your planned savings contributions on time for 3 months? Go out to a nice dinner with your spouse.
Halfway to your Carefree Retirement Where I Can Do Anything I Want savings account goal? Take a weekend trip to that lakeside town where you’re thinking about retiring.
(See? Sounds more fun than Extra Savings Account, right?)
One of the best ways to visualize, prioritize, and plan for your 2020 financial goals is to revisit your Return on Life assessment to see where you want to make progress. Schedule an appointment to come in and talk about what you want to accomplish this this year. We're not just financial advisors, we're Financial Life Planners. Let us help you make your life as awesome as it can be!