There’s been talk of recession brewing for months now. The term is coming up on the news, over dinner, and around the proverbial office water cooler.
After the year that 2020 has been, there’s no doubt that most of us are ready to ring in a new year! For many of us, that means setting goals and resolutions in an effort to become better versions of ourselves. For some of us, that means getting in better shape, eating healthier, spending more time with family, and for many people, our New Year’s resolution often revolves around financial goals.
Setting solid financial goals, and ultimately achieving them, is vital to living the kind of life you’ve envisioned for yourself and your family. Everyone’s vision is different, but no matter what your vision looks like, setting goals is the first crucial step in obtaining your goals—whether it’s for a New Year’s resolution or just a general goal. Setting financial goals forces us to think beyond the day-to-day activities of life and look at the big picture.” Use this five-step guide to help you make and stick to your financial New Year’s resolutions:
1. Set SMART Goals
One of the most basic ways to help you reach your goals is to ensure they are SMART. SMART is an acronym that stands for specific, measurable, attainable, relevant, and time-based. For example, a SMART goal would be something like: “By December 31, 2021, I will save $2,000 to put toward a down payment on a home by saving an additional $166 per month.”
It’s important to set SMART goals because vague, unrealistic goals such as “I want to save $10,000”—with no set timeframe or idea of how you will actually achieve the goal—can easily be abandoned.
Your resolution should not be vague. When you make vague, indefinite goals, you decrease your chances of actually accomplishing them. An example of a vague goal is “I want to save money.” This goal does not indicate a specific amount, nor does it have a definitive date, so you’re likely to be lax with building your savings and place it on the back burner for impulsive purchases and unplanned events.
2. Get an Accountability Partner
For me, one of the most important things about achieving my goals is speaking them into existence with someone who I respect and trust to hold me accountable. Your accountability partner should be someone who you know isn’t going to be a ‘yes man,’ agreeing with you when you decide to frivolously buy the latest iPhone or do something that is counterproductive to your financial goals. Your accountability partner can be a spouse or partner, best friend, or family member. Just make sure it’s someone who you know will tell you the truth if you’re slipping but also be your cheerleader when you meet milestones!
3. Use Automation and Track Your Progress
Automation is a great way to build momentum and stay on track with your financial goals. Whether your goal is to pay off debt or increase savings, credit card bills, loan payments, and savings contributions can easily be automated by leveraging the tools at your disposal!
You can automate payments to credit card or loan accounts through your financial institution’s online banking system, or automate savings contributions through paycheck contributions or account transfers. The great thing about automation is that it’s out of sight, out of mind, and one less thing you have to worry about! When you automate, you essentially stash money away before you’ve even had a chance to see it and/or spend it, so you can quickly adjust to your new budget!
With today’s digital tools and resources, it’s easy to track your goal progress. There are apps and tools within many online banking platforms that allow you set up and track goals. Sometimes, just seeing a visual representation via a chart or graph of how much you’ve saved or paid down debt is just the encouragement you need to stay motivated.
4. Stay Focused
For the most part, when it comes to setting financial goals, you’re going to have to think about the long game. Whether you are saving for a major purchase or paying off debt, most financial goals and resolutions will take time, so it’s important that you stay the course. Most people can’t save for a down payment on a house in two months—it takes time and dedication! But, if you stay focused, your patience and persistence will pay off in the long run. Delayed gratification is not always easy, but it’s usually worth it.
5. Reward Yourself
One of the things that helps keep me on track when I’m pursuing goals is having milestone rewards. For example, if your New Year’s resolution is to save $5,000, and to help meet that goal, you cut out your daily coffee trip, you can reward yourself with a trip to your favorite coffee shop once you hit $1,000. As mentioned earlier, meeting these goals is likely going to take a great deal of time, so treating yourself to small rewards along the way can help you stay focused and on course. Obviously, you don’t want your reward to be anything so significant that it derails your progress, but small “trophies” along the path of your journey can help keep you motivated.
This list is not absolute, but it should provide you with a good starting point for setting solid financial New Year’s resolutions—and most importantly, sticking to them! What New Year’s resolutions are you setting for next year? Share with us in the comments below and let’s share some ideas that can help us all stick to our goals!
Victoria Penn is the AVP of Marketing for SWBC. She manages a team of marketers that develop traditional and digital marketing strategies. She also leads the Content Marketing Strategy for SWBC.