Kickstart the New Year with Fresh Financial Goals

The start of a new year offers a perfect chance not only to improve your physical health (working off all the sugar we ate from December), but it is also an opportunity to rethink your finances and set clear goals that can improve your financial health. Many people begin the year with vague ideas about saving more or spending less, but having a solid plan that specifically measures what you want to accomplish this year can make the best of intentions come to fruition. Setting specific and fresh financial goals this year can give you direction, motivation but most importantly HOPE! Being intentional to make meaningful changes today will help prepare you and your family financially this year and the years to come. Here are some practical steps to help you to create a plan to reach your financial goals this year that are more than just "positive thinking" but things you can actually do today!

"Write down the vision; make it plain on tablets, so that he may run who reads it" - Habakkuk 2:2

Understand Your Current Financial Situation

Before setting new goals for the future, you need a crystal clear picture of where you stand financially today. This means taking a look at your whole financial picuture by reviewing your budget (income minus expenses), debts, savings, and other investments. If has been a while since you have tracked this information, that's alright, we are going to get started today!

A few good places to start include:

• Listing all sources of income (Work, Overtime, and Side Hustles)

• Evaluate your fixed expenses like rent, utilities, and loan payments for any noticable changes

• Track how much your variable expenses are adding up to be per month (Ex. Groceries, Entertainment, Subscriptions, and Dining Out)

• Calculate your total non-mortgage debt and check the interest rates for each debt

• Check your current savings and other investments (Retirement, 529s, etc.)

  
  

Knowing these numbers helps you identify areas where you can cut back or need to focus more attention.

Set Specific and Realistic Financial Goals

Setting vague goals like "save more money" or "get out of debt" sound great in theory, but are difficult to accomplish without having specific numbers to measure. Instead, make your goals specific, measurable, and achievable.

Use the SMART criteria:

• Specific: Define exactly what you want to achieve

• Measurable: Attach a number or deadline to your goal

• Achievable: Ensure the goal is realistic to your situation

• Relevant: Align the goal with your values and priorities

• Time-bound: Set a clear timeframe for completion

  
  

Examples of good financial goals include:

• Save $1,000 for an starter emergency fund within 3 months

• Pay off $5,000 credit card debt in 12 months

• After becoming Debt-free, Save $9,000 in 9 months to fully fund emergency fund

• After Fully Funding Emergency Fund, increase retirement contributions to 15%

• Create a Christmas Sinking Fund by saving $50 per month to have $600 at the end of the year

  
  

Writing down your goals helps to make it easier to track your progress along the way and keeps you accountable to them.

Create a Budget That Supports Your Financial Goals

After understanding your current financial situation and you set some specific and measurable goals, it is time to create a budget to help support your financial goals.

Determine if your budget reflects your goals by:

• Evaluating if there is enough margin, after all expenses are paid, to work towards your goals.

• Making necessary adjustments to the budget, if required, to ensure there is enough margin to actively work towards your goals.

• Track your spending weekly or bi-weekly to stay on course throughout the month

  
  

For example, if your goal is to save $3,000 in 12 months, you'll need to save $250 each month. Reaching this goal may require finding places to save money in the budget, increasing your income, or selling something to get there.

Break Free from Debt

Proverbs 22:7 says, "The rich rules over the poor, and the borrower is the slave of the lender." Debt cannot be part of your financial strategy because it holds you back from achieving financial freedom.

Prioritize paying off the smallest debts first and working up to the largest using the Debt Snowball (Financial Peace University, Baby Step 2).

• Debt Snowball: Pay off the smallest debts first to build momentum and motivation up to the largest debts.

  
  

Accumulating new debt is easy to get into, but is difficult to break free from. The best way to save money is to avoid borrowing someone else's.

Build an Emergency Fund

An emergency fund is a safety net that covers you and your family during unexpected expenses that come up at the most inconvienent times, like car repairs or medical bills. Without it, emergencies can derail all the progress you've made and put you in a bad spot. That is why it is important to have an Emergency Fund to help cover you in the event of an emergency.

Aim to save at least $1,000 to start your emergency fund if you have non-mortgage debt (Financial Peace University, Baby Step 1). After paying off consumer debt, aim to save three to six months’ worth of living expenses fully fund your emergency fund (Financial Peace University, Baby Step 3).

When saving, be sure to:

• Determine your total savings goal

• Make savings a budget line item as if it were a monthly bill

• Open a separate savings account to your checking to help avoid spending the money you've saved

• Pause your financial goals temporarily to replenish your emergency fund if used

  
  

Having some cushion to cover the blow of an emergency significantly reduces the stress of managing it and gives you peace to continue going forward with your goals.

Plan for Long-Term Goals

*Disclaimer: I am not a financial advisor, nor claim to be giving specific investment advice

While short-term goals are important, long-term goals are necessary to aim for as well. Retirement planning is one example of long-term goal that should begin (once free from non-mortgage debt) as early as possible to take advantage of compound interest that accumulates over time.

Planning for Retirement starts by:

• Consulting a financial advisor for personalized advice aligned with Ramsey Principles

  • Ex. Good growth stock mutual funds, Roth 401k and Roth IRA, etc.

• Contributing 15% of gross income (Financial Peace University, Baby Step 4) to employer-sponsored retirement plans, especially if there is a match

• Open an individual retirement account, Roth IRA, if you don’t have access to a workplace plan (Ex. Self employment, or exceeds retirement contribution limits).

• Review your investment portfolio with your financial advisor annually to ensure it matches your risk tolerance and financial goals

  
  

Setting long-term goals like saving for retirement or a child’s education helps you stay focused on the present, while planning for future so that you build lasting wealth.

Track Progress and Adjust as Needed

Financial goals are important, but not reaching them doesn't mean you've lost, it means you made progress in the direction you planned to move! Life changes, unexpected expenses, or shifts in family priorities may require you to adjust your goals for that season and that's perfectly ok! Be sure to give yourself grace and regularly review your progress for your family's goals every few months to ensure you are on track with where y'all want to be.

While working on your goals, don't forget to:

• Include the family when planning for this year's financial goals

• Identify challenges in last year's plan and prayerfully consider solutions that will help overcome them this year

• Adjust your goal's timelines or amounts if necessary, but avoid throwing in the towel altogether

• Celebrate your family's milestones and victories to stay motivated, regardless if it seems silly to celebrate small victories

Using visual aids such as budgeting apps (EveryDollar), spreadsheets, or handwritten charts can make tracking much easier and provide visual progress reports along the way. What a great way to make take the stress out of money by celebrating an A+ progress report along with the kids! Both can make it on the fridge!

Conclusion

Kickstart the New Year in high gear with fresh financial goals that not only breathe life into your bank account, but will also breathe life into your relationships at home!

This year let's make some financial goals that aren't just about money, but are tied to helping our relationships thive too! Building healthy finances is certainly hard work, but the reward is most definetly worth it because having a healthier homelife is truly priceless!

So, what goals do you have planned this year?

Notes:

• Financial Peace University's "7 Baby Steps" from Ramsey Solutions

• How to Plan for Retirement article from Ramsey Solutions Website

  • Link: https://www.ramseysolutions.com/retirement/how-to-create-your-retirement-plan