January 22, 2025 | By Jessica Goedtel, CFP®
It’s that time of year again – when you get inundated with articles and posts about New Year’s resolutions. Honestly, I love them. I know it’s an arbitrary date in the sand. But something about the shift from cheese-filled holidays to the new year gets me in the goal-setting mood.
Financial goals also fit nicely with a 1/1 date. Contribution limits reset. A whole new tax year starts. Embrace the newness and use this as your springing board to dive into your financial goals for the year. Here are some of my tips to make them successful.
Start with your cash flow. It’s vitally important to understand where your money is going right now. You need to know what you’re working with.
Get your main expenses together: your regular bills, debt payments, and subscriptions. You don’t have to pour over your last three months of Amazon and Grubhub orders (no one needs that kind of negativity). Grab your first paycheck for the year and note your take-home pay. Double it if you are paid bi-weekly or bi-monthly. Self-employed people – use the income from a recent low-income month and then back out taxes from that amount (25% to start if you aren’t sure how much – but please call a tax person if you don’t!).
Subtract your main expenses from your monthly take-home pay. What’s left covers two things. First, your discretionary spending. This includes things like eating out, groceries, shopping, and fun money. Second is savings (and paying down credit card debt, if you have it).
You can increase these funds throughout the year if you get a pay raise, cut expenses, or pay down debt. But for now, start with what you have.
For Now Goals and For Later Goals. As much as I’d like to save all my money towards a kitchen renovation, future me needs love too. Retirement savings should have a place. There is no magic number, but saving 15-20% of your income is a good target.
Break it down. Are you looking to pay off your credit card debt this year? Save up for a downpayment for a home? Whatever your goal is, define first how much you need to achieve it. Then break that down monthly. Can you fit those goals in your cash flow and still have spending money? If not, then adjust. It’s important to be honest with yourself here.
Have a system. There are approximately a zillion financial apps out there. Not to mention a bunch of budgeting methods (what does “pay yourself first” even mean, anyway?). Personally, I love a good spreadsheet. It doesn’t matter which system you choose – just pick one. If it’s not working, try a new one. The right system is the one that works for you and helps you work towards your goals.
Track your contributions. Remember those sticker charts you had in kindergarten? Let’s bring those back. Keep track of your financial contributions and put it somewhere conspicuous. It’ll serve as a tool to keep you motivated, but will also remind you to celebrate all the hard work you’ve done so far.
Set mini-challenges. This one is great for specific weak spots in your budget. For example, let’s say you do takeout more than you’d like. You could set a mini-challenge for no takeout for two weeks. The reward could be a nice sit-down dinner at that restaurant you’ve been wanting to try.
My weakness is books. I have stacks of books I’ve bought but haven’t read yet. I’m currently challenging myself to read ten books I already own before buying any more books. My reward is a trip to my favorite place in the world – the library 😊.
Mini-challenges should be achievable while still pushing you forward. Keep them fun, short, and motivating.
Have regular check-ins. Put a weekly reminder on your calendar to update your numbers. Review what’s going well, and what needs adjusting. Include other members of your financial household in the discussion. Talk through how you can help support each other in your goals.
Stay on track. A lot of people get burned out quickly after setting new goals. Trying to do too much at once, or not setting realistic goals are the usual culprits. The first trick is to notice what’s going wrong. The second trick is to brush your shoulders off and keep moving.
This might mean adjusting your goals or plan. This is not giving up. Giving up is giving up. I’m here to tell you that any work you do towards your finances is better than nothing. Take those small steps where you can, and don’t be discouraged. Houses are made one brick at a time, and your financial house is no different.
Want to get your financial house built with a strong foundation? Schedule a call with me today and let’s build together.
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