The new year can feel like a fresh start and a great opportunity to set intentions for the months ahead. You might be thinking about what you want to accomplish in 2025 and begin organizing your goals accordingly. For many people, financial resolutions will be on the list.
If you're aiming to improve your personal finance management and reach new milestones, it's important to set clear expectations for each resolution. It's wonderful to have big aspirations, but if your goals aren't realistic, it'll be much more challenging to accomplish them. Achievable goals are the key to making sustainable progress and avoiding feeling discouraged. So, how can you be sure you're creating financial resolutions that set you up for success? Let's walk through some guidelines together.
To start, let's consider why many resolutions can commonly fall through. The truth is, people will often feel let down when they set financial goals that are too high. You might want to save a lot of money each month or pay off a big amount of credit card debt quickly. However, if it starts to feel like your plans aren't working out, it can be tempting to give up altogether.
There are some reasons your goals might start to feel unattainable:
When you understand these common pitfalls, you can begin shaping more realistic goals and feel excited about your progress every step of the way.
To improve your likelihood of success, it's important to have a strategic approach to goal setting. It starts by understanding where your finances are right now, where you would like them to be, and how each financial goal will bring you closer to this vision. Here are some steps to follow to keep your financial planning goals realistic.
To give yourself a clear picture of your financial situation, the first step is to take a good look at your income and all expenses. Gather things like bank statements, credit card bills, and loan statements. This helps you see how your cash flow is being used. Then, you might immediately see areas where you can spend less and take more control of your money. With more visibility, you can create a budget that matches not only your aspirations but your income and spending habits.
Each person's list of priorities will be unique based on their financial situation and goals. Begin by asking yourself what matters most to you in the upcoming year. This could be saving for your child's college education, addressing unexpected expenses, making extra payments toward credit card debt, or building an emergency fund. Consider the impact of each goal on your overall financial situation and stability.
While you're working toward financial freedom, it's crucial to keep a balance between long-term goals with short-term needs and fun. If you miss out on small pleasures, it can add resentment to the process and make it hard to follow your financial plan. While you're making strides toward success, remember to set aside part of your paycheck for basic needs, savings, and some treats. This helps you take care of both your present self and your future self.
As we mentioned, vague goals can make it hard to keep track of your progress and stay motivated. That's why it's important to turn your main ideas into clear financial goals that are specific and measurable, also known as SMART goals. For example, instead of just saying "save more money," you could set a goal like "Save $5,000 for an emergency fund within the next six months."
It also helps to organize different types of financial goals by how long they're estimated to take. Short-term goals might be things like paying off a credit card within a year. Long-term goals can include saving for retirement over many years.
If you want to build emergency savings, figure out exactly how much you can save each month. You can set up automatic transfers to your savings account. Breaking big goals into smaller steps helps you stay organized. It also keeps you motivated and on track to reach your financial goals.
Once your carefully crafted goals are in place, you'll want to be sure you're taking measures to ensure you follow through. Setting specific financial goals is a great start, but you have a plan for how you're going to stick with it. That way, your goals remain achievable over time.
Instead of attempting to transform your finances overnight, build your confidence by setting and achieving smaller goals. Short-term goals that align with your financial situation allow for gradual progress and build momentum. As you become more comfortable in managing your finances, you can gradually increase your goals to challenge yourself while staying realistic. These small victories help boost your financial literacy and pave the way for larger achievements in the future.
For example, consider starting with saving a set amount each month or reducing unnecessary expenses. Breaking down larger goals into a simple start can lead to more significant outcomes.
As you're working toward your financial resolutions, don't overlook the power of social support. It can be great to involve friends or family members as accountability partners. By sharing your goals with trusted individuals, you're adding a layer of responsibility and emotional encouragement to your financial journey.
Whether it's a weekly check-in or a shared savings challenge, having someone to share successes and setbacks with can help you stay on track. That said, don't hesitate to lean on your loved ones for guidance and motivation as you work towards a more secure financial future.
If you're feeling overwhelmed, technology is a great way to simplify tracking your financial success. You can start with a basic spreadsheet, or use a budgeting app like YNAB or Oportun to track expenses, set financial goals, and monitor progress effortlessly. You can also stay on top of your credit score with platforms like Credit Karma to regularly assess your financial health.
If you're investing, you can incorporate a robo-advisor like Betterment for a hands-off approach to wealth management. Embracing technology not only simplifies financial management but also empowers you to make informed decisions for a secure financial future.
Time and time again, we find that the best way to meet financial resolutions is to keep them realistic. To help you in the process, Addition Financial offers a range of tools and resources to support your journey. No matter what you're budgeting for or how much money you're trying to save, we have financial products and services to meet your needs. Start enjoying the benefits of membership today!