New Year, New You
Ringing in the new year means it’s time to set some big financial goals, too. Whether you want to save more money, pay off debt or buy a new home, these tips from financial experts will help you achieve even your most ambitious money dreams.
Review your finances.
The first step toward setting financial goals is to review your current financial situation so you understand where your money is going. That way, you can pick areas to scale back spending and redirect money into savings instead. Writing out your current assets, debt and spending patterns offers clarity into what you need to change.
Dream big.
Kris Duggan, chief executive and co-founder of the goal-setting software BetterWorks, says many people hurt themselves by choosing “safe” goals that are easy to achieve but not challenging enough. If you set big goals for yourself, you might come up short, but you’ll also push yourself to your highest limits, he says.
Take baby steps.
Big goals can be overwhelming until you break them down into smaller parts. If the goal is to save enough for a down payment on a home, then start by saving a specific amount of cash each month. An even smaller step could be to cook two meals at home each week in lieu of ordering takeout.
Be specific.
Instead of resolving to “save more,” pick a number and challenge yourself to save that amount each month. Likewise, be specific about the debts you want to pay off and in which order; perhaps you want to start with credit cards and then move on to student loans.
Share your goals.
Letting supportive friends know that you’re trying to save more money can make it easier to explain to them why you can’t meet up for an expensive night on the town. It can also offer an accountability partner who checks up on your progress while sharing his or her own.
Write them down.
Writing down your goals, either in private or publicly on social media, can also help hold you accountable. If you announce to all your Facebook friends that you’re going to start spending less so you can finally free yourself of credit card debt, then you might put more pressure on yourself to stay motivated.
Let go of bad habits.
If you tend to call cabs more than you need to instead of taking public transportation or you’ve developed a weakness for ordering in almost every night, then it’s a good time to replace those habits with more frugal ones. Take a close look at your spending patterns for a week to see what you can begin to cut out.
Team up with your partner.
If you share your finances with someone, then you’ll want to get on the same page with your financial goals. Set up a money date to review your current finances and what you want to work on together. That way, one of you won’t be packing brown bag lunches while the other splurges.
Review recurring monthly expenses.
Bethy Hardeman, chief consumer advocate at Credit Karma, points out that monthly expenses can quickly add up, which is why she encourages people to review them closely and see what they can cut. Netflix, cable, gym memberships — they all deserve scrutiny.
Automate.
Setting up automatic deductions from a checking account or your paycheck into a savings account can make it even easier to build up savings because you don’t have to think about it. If you have a specific savings goal, like a new car, then you might also want to create a new savings account dedicated to that purpose, and arrange for automatic payments into that new account.
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