Some people want to rid themselves of debt, others want to start an emergency fund, and others are saving for a large purchase like a down payment on a house.
No matter what your financial resolutions are for the New Year there are several steps you can take to make sure you actually reach them.
Here’s how to set attainable financial goals in the New Year.
Start by Thinking Big
One of my favorite books, Eat that Frog by Brian Tracy, suggests that you start your goal setting by thinking big. You need goals that are large and important enough to motivate you but that are still attainable.
What have you been wanting to do but haven’t got around to? What are some financial goals, which if you reached, would impact your life the most? Start your goal list with those big audacious goals.
Here are a few examples:
- Pay off $20,000 in debt
- Save $15,000 for a down payment on a home
- Save $10,000 in an emergency fund
- Start your own business
- Buy a rental house
- Max out your retirement accounts
Let your imagination go wild and write down all of the financial goals you want to work toward. At this point no goal should be considered too big.
Write it all down. It’s a proven fact that people who put their goals in writing are far more likely to succeed than those who don’t.
Choose Three Goals
Now that you have all of your goals written down review your list and choose the three that would make the biggest impact on your life. These three should also be realistic goals. (But remember most things in life are realistic as long as you make a plan and work for them.)
If the three financial goals you’ve chosen feel too big to be accomplished in one year that’s okay. You can either work on one goal at a time until you finish it or you can break all three goals down into smaller chunks that you’ll be able accomplish in one year.
Make a Plan of Action
Now comes the fun part – time to make your plan of action!
When you set yearly goals they can be intimidating. Paying off $20,000 in debt sounds like a lot but if you look at the monthly and weekly amounts the goal starts to feel more real. You need to take the time to break your goals down into monthly, weekly, and even daily tasks/amounts so that you can form an attainable plan to reach your goals.
So now that you have your big goals it’s time to break them down into smaller ones. Let’s look at an example.
You want to pay off $20,000 worth of credit card debt this year, to do this you’re going to have to:
- Pay $1,667 per month or
- Pay $387.67 per week, which would break down into
- $55.38 per day
Breaking the goal down into weekly and daily amounts may not make sense to you. If you get paid biweekly then breaking down the numbers every two weeks might make more sense. Do what works for you. The point is you need a set plan of action to help you reach your goals.
Once you have your big goal broken down into several smaller, manageable goals you can further elaborate on a plan of action.
This means making some life changes. Setting a realistic budget, being creative with savings, earning extra income, and tweaking everything as you go will all be musts.
Set Time Limits
To keep your momentum going you also need to set time limits for your goals. For instance, instead of saying you’ll pay off $20,000 in credit card this year say that you’ll pay off $5,000 in credit card every three months. This way you’ll be able to celebrate more accomplishments.
Setting time limits for your goals will encourage you to build momentum.
Don’t Give Up
At one point or another you’ll lose sight of your goals and fall off the bandwagon. This happens to everyone. The difference between success and failure, however, is your ability to pick yourself back up and get back to work.
Anything worth having doesn’t come easy. It takes hard work and a lot of sacrifice. That’s why it’s so important for you to set those goals that will improve your life and inspire you to take action.
As long as you commit to smart goal planning and accept that fact that you will mess up a time or two you should be well on your way to actually achieving your New Year’s Resolutions this year.