Submitted By: Ronald S. Zweig, Registered Investment Advisor, CPA, Partner, Warady & Davis LLP. SJ Financial Advisors.
When it comes to your financial resolutions this year (and beyond), use these tips to actually keep and reach your goals.
Turn Dream into Goals
Dreams are something the heart wants, and the mind can envision. Whether that’s opening your own business, retiring early, taking a trip around the world, or even just being able to pay for part of your kids’ college tuition. The hard part is taking those big ideas and transforming them into actionable goals.
Financial goals operate like any other goal in the way that they benefit greatly from being written and planned at SMART: specific, measurable, attainable or agreed-upon, realistic, and time-based.
Taking a big dream and breaking it down into something that features clear-cut amounts and is tied to a certain time can be difficult, but that’s the purpose of SMART goals—to make you think with intention about your goals before agreeing to them. Take a blank piece of paper and write out a few versions of the same goal, and then talk it over with trusted confidants or other stakeholders (such as a spouse or business partner) before solidifying the goal(s) you’re going to stick to.
Google It
Want to make a financial goal but aren’t quite sure where even to start? Surf the internet to get some crowd-sourced ideas and then adapt them to your personal situation. Google “financial resolutions” or “ideas for financial goals” to get your brainstorm going. You can also look at your social media network, asking your digital community for examples of their personal finance intentions.
Baby Steps
If you’re saving for something big, like a down payment on a house or want to completely pay off a maxed-out credit card, those are huge numbers at face value. But, if you set a miniature step, such as saving $125 a week that you will then put toward the payment or bill, it becomes more manageable.
After even six months, the weekly savings will have added up to a significant number that will cut away at the greater goal. Set a plan for how you can save that $125 a week by reasonably cutting down on extraneous expenses (coffee shop lattes, shoe shopping, sports tickets) more often than you have in the past.
Get a Personal Trainer for your Money
When we make exercise and weight loss goals, one of the first things we should do is invest in a personal trainer—someone to hold us accountable for our goals. Consider a financial advisor your guru to get your portfolio in shape. If you already have such an advisor, get back in regular contact with them.
Set up an appointment to clue your advisor in on your annual resolutions and set a plan to reach your goals together. If you don’t already have a financial advisor in your contact list – that’s your first step. Not sure where to even find a financial advisor? Ask your advisors, close friends, family, and colleagues whom they trust with their money.
Regular Review
Don’t wait until December 2017 to refocus and reevaluate. Set a calendar reminder to regularly review your financial goals in increments that make sense for your monetary goals (whether that’s once a week, month, or quarter). During these review sessions (that should sometimes include your financial advisor), be thorough and honest with your progress and setbacks.
Slip-Ups Will Happen
You’re not a perfect person, and it’s wrong to assume that just because you’ve set a financial goal, the journey to that goal will be without a few pitfalls. If saving, investing, and reaching financial goals were easy, you likely would have already done so. And failure is likely to happen. Say your goal is to pay off all credit card debt over the next 10 months, but you end up spending extra cash flow on a spontaneous trip.
It’s okay, but don’t beat yourself after the fact or think that because of one diversion, your whole goal is kaput. Derek Tharp, a financial planner at Conscious Capital Inc., told Forbes in an interview that “temptation bundling” can be a good way to incentivize yourself to keep your difficult monetary resolutions. For instance, say you want to pay off your student loans at a better rate than in years past. Set up your automatic payments to meet your goal rate and tell yourself that you will visit your favorite, pricey restaurant for a nice dinner only after you reduce your base loan amount by a 40%.
Embrace Technology
Your smartphone and laptop are always nearby, so use them! There’s a wealth of financial apps out there to help you set and track your financial progress toward goals. For a low monthly fee or even for free, you can have a personal budget tracker and analyst in your pocket that can assist in budgeting and investing daily. Turn the notifications on, and you’ll quickly notice that financial budgeting and savings apps are a solid way to keep your goals top of mind well after the new year has passed.
Resources
- How to Set, And Keep, Your Personal-Finance Resolutions
- How to Create a Financial Plan Like a Pro
- Smart Goals
- Top 7 Apps for Putting Short-Term Financial Goals in Motion
- 5 Ways to Meet Your Financial Goals in 2014
- 9 smart things to do with your annual bonus