Every new year most of us make heavily optimistic new years’ resolutions promising that we’ll diet or exercise or cut out chocolate, or alcohol or be nicer to people at work. Sadly though, very few of us stick to them. Probably because they are unrealistic promises and don’t come with any tangible ‘positives’.
Setting financial goals, on the other hand, is a positive and you can immediately see results. Financial planning is a scheme for squeezing the maximum value out of every dollar you earn.
Setting financial new year’s resolutions is a great way to take control of your financial situation and work towards a brighter financial future. If you look upon budgeting and financial goal setting as a ‘spending plan’ rather than a sentence to misery and no fun, it can actually be very satisfying.
A lifestyle plan for the new year
You work hard for your money so you might as well spend it on worthwhile stuff, rather than just watching it quietly disappear without anything to see for it. Why not see financial goal setting as more of a lifestyle plan and a way to get what you want?
So, if you’re going to make the new year to sort your money out, here are seven steps you can take.
1. Identify your financial goals
It’s hard to set financial goals if you haven’t thought about what kind of life you want now and in five, 10-, or 20-years’ time. Therefore, making a list can help.
By writing things down, either on real paper or on your phone or on a computer, you may find prioritising easier. Lists are a way of clarifying why you’re saving and what your hard-earned money is going to get you.
What do you want to achieve financially in the new year? Do you want to pay off debt, buy a new couch, save for a down payment on a house, or build up your emergency fund? Clearly defining your financial goals will help you focus your efforts and make the most of your resources.
2. Organise your financial goals
Next, you need to sort your financial goals as short-, mid-, or long-term. Then you need to set a target date for each of your financial goals.
When setting financial goals, having a mix of both short- and long-term objectives really helps your motivation. It can be hard to continually save for a goal that’s 15 years away. However, if you are working to a plan with weekly, monthly, annual and long-term goals, you’ll get the rewards along the way that will keep you going. These might be buying an e-bike by Christmas or going to the Cook Islands in August 2025 or saving up for a child who may be heading to university in 2035.
3. Needs, wants and have tos
After that, you need to prioritise your financial goals as critical, need, or want. Think about what is most important to you financially. Yes, a new handbag may seem life-changing, but chances are it’s not critical whereas building up your emergency fund and getting rid of credit card debt actually are critical. Buying a new washing machine within 6 months is a need. Prioritising your financial goals will help you focus your efforts and make the most of your resources.
Label each goal on your list. That way if funds become tight one month, you can move your money from a ‘want’ to a ‘need’.
4. Identify your current financial situation
Take stock of your current income, expenses, debts, and assets. This will help you understand where you stand financially and identify areas where you can make improvements. You may also need to find ways to increase your income, cut back on unnecessary expenses, or find ways to save more money.
5. Create a budget
A budget can help you track your spending and make sure you are on track to achieve your financial goals. Remember though, successful budgeting is about allocating more money to things that matter to you. If you’re too hard on yourself or you think you can keep your budget in your head, which is very tricky, you might get discouraged and give up. To help you stick to a budget, you could create your own spreadsheet to track your finances or there are loads of online budgeting tools you may find useful. You might also think about enlisting the help of a friend or family member to hold you accountable and offer support.
6. Don’t get stuck
Seek professional help if you’re struggling. If you are having trouble setting financial goals or managing your finances, consider seeking the help of financial experts. FinCap New Zealand offers free services and they would be happy to assist. They can provide valuable guidance and support to help you achieve your financial goals.
7. Stay motivated and on track
Setting financial goals is an ongoing process. You may need to adjust your goals as your circumstances change or as you make progress towards your objectives. The important thing is to take control of your financial situation. To do that you need to set some goals, make a plan, create a budget, and put your plan into action. Also, remember, life is a balance. Financial goals are about spending more on what makes you happy. It’s up to you to make mindful, sensible choices with your money so you can live the way you want.
Wishing you a prosperous new year
Making financial New Year’s resolutions can be a great way to take control of your finances. With a little bit of planning and effort, you can achieve your financial goals and enjoy greater financial stability and security in the new year.