The end of the year signifies a fresh start for many. This year, the pandemic turned our plans upside down. And as we put it behind us, it's high time to think about making new financial goals.
However, setting new goals while coping with COVID-19 can be overwhelming. Many people are still coming to terms with what they didn't achieve this year. But don't let it deter you from planning for your future.
We want to help you set new financial goals that will stick during and after the pandemic. So in this blog post, we share goal setting tips, and later offer examples of practical financial goals.
How To Set Goals That Stick
Learn From The Past
Before putting 2020 goals to bed, take a moment to reflect on what worked out, what didn't, and find out why. This will help you set goals that will withstand the effects of the pandemic.
Set Emotionally Motivating Goals
Goals tied to what people truly value are more achievable than those tied to money. And yet, many people set financial goals that are less focused on things that motivate them emotionally and more about money.
For example, planning to save 15% of your income is not as powerful as saving $10,000 to take your loved ones on vacation next holiday. Apart from being emotionally motivating, this goal is specific, measurable, achievable, relevant, and time-bound (SMART).
So as you define your financial goals for 2021, prioritize what is important, what is realistic, and give each goal a timeframe.
Create A Financial To-Do-List
The end of the year may be the perfect time to recommit to becoming financially stable. But without clear action plans, you can only do so much.
Creating a financial to-do-list is one of the best ways to have clearly laid out action plans. This will help you put your finances in order. If you haven't thought about them, here are a few examples to consider:
- Making the most of your employer's retirement plan.
- Tracking your spending to monitor where your hard-earned money is going.
- Determining your network so you know where you stand fiscally.
- Being thoughtful and strategic about investment decisions.
- Setting a good example financially for your family and loved ones.
Now that you know how to set goals that stick, let's take a look at a few examples of practical financial goals that will propel you towards a more stable and secure financial future.
Practical Financial Goals For A More Secure Future
Stick To A Budget
Living within your means sounds reasonable. But many people find it difficult to stick to a budget. But if you want to build a financially secure future, you must make a budget a part of your daily life. And here are a few ways to achieve it:
- Plan meals before visiting the grocery store.
- Sell old or unused items before buying new ones.
- Review your budget after every month.
- Don't ignore fun activities when creating your budget.
Invest In The Future
Regardless of what you're earning, investing in the future is one of the best ways to achieve financial stability. So apart from planning for retirement, investing in your future also includes saving money for short-term and long-term financial goals.
If you don't know how to save for tomorrow's needs, here are a few tips to consider:
- Make it compulsory to save every month, even when money is tight.
- Build an emergency fund of at least $1,000.
- Build your professional portfolio with additional training, conferences, and classes.
- Stay on top of all your insurance policies
Build A Financial Buffer
Studies show that millions of Americans are just one paycheck away from financial catastrophe. And this is because many don't have a financial cushion in place to see through sudden unemployment or unexpected expenses.
If you're one of them, make it a goal to build a financial and keep a financial buffer. Don't know how to go about it? Follow these strategies:
- Channel windfalls, such as holiday bonuses, inheritances, and yard sales to a buffer account.
- Grow the buffer slowly over time. For example, contributing $50 a month translates into $600 after one year.
- Watch out for unnecessary expenses like overdrafts and subscriptions.
No one has ever improved their finances by worrying over it. In fact, worrying can adversely affect your cognitive capacity and increase your chances of failing to pay your bills on time.
To help you stay on top of your finances without stressing, follow these strategies:
- Set up automatic bill pay.
- Review your accounts regularly.
- Take personal finance classes or courses.
- Live within your means.