Posted on Friday 03 January 2020
When it comes to your personal finances, setting them is only half the battle. The real question is whether or not you can actually achieve them. Putting goals into action—and seeing them come to fruition—takes focus, work, and a healthy dose of determination.
But if you aren’t in the regular practice of making financial goals, how do you know if you’re truly setting yourself up to achieve them? It isn’t easy to know where to begin, and if you aren’t careful, you could find yourself backsliding and forgetting all about your personal finances. Don’t let your financial goals become another forgotten New Years resolution (here’s looking at you, lonely gym membership).
If you want to give yourself the best chance to meet each and every goal in 2020, you’ve come to the right place! In the sections below, we’ll give you five expert, actionable ways to create and achieve your financial goals this year.
You can’t figure out where you’re going unless you know where you’ve been—and while it feels cliché, the same is true when setting financial goals. We all have a general sense of where our finances are at and where we can improve, but this is all about getting cold, hard data.
Start with the debts that you have. List out all of your credit cards and loans (whether it’s two or twenty) and include your current balance, your credit limit, and your interest rate. And if you haven’t been looking closely at your statements, now is the time to do it! Find out how much interest you are getting charged each month so that you get a fuller understanding of where your monthly payments are going.
After you’ve got your debts listed out, think about all of the other payments that you are making. Include rent or mortgage, utility bills, internet and phone bills, and any other recurring payments that must be made each month.
Getting all of your debts and payments down on paper is a great way to uncover any hidden issues that may be lurking in your financial health, and will help you identify the types of 2020 financial goals that you should be making.
Give yourself the right goals to work towards. To start, think about what matters to you and where you want your personal finances to be headed in 2020. Write out everything that comes to mind—and don’t worry about organizing or making it look pretty.
Once you have your wish list put together, you can use the SMART principle of goal-setting to start building your 2020 financial goals. To use the SMART approach properly, you will want to make sure that you are creating goals that are:
Once you have a list together, you can start separating out the realistic from the unrealistic and identify what can be accomplished in the short term versus the long term. You will also get a sense of which goals are most connected to your personal motivation. As you write them down, pay attention to how each goal makes you feel: does the thought of completing that goal make you excited or optimistic? If so, that’s a good goal to keep!
If your goal is to improve your credit score in 2020, then this is a no-brainer. But your credit score is a key part of your overall financial health, and can have a ton of implications for nearly any goal that you set. If you want to save up enough money to buy a new car or purchase a home, you can’t get away with ignoring your credit score. And for more long-term goals, having a strong credit score will act as the foundation for success later on.
If you want to request a copy of your current credit report from the major credit reporting bureaus, you are legally entitled to one free copy each year. Any additional copies will incur a fee (and that cost differs from one bureau to the next).
Going directly to the credit bureau is not a bad place to start, but there are better ways to keep an eye on your credit. Instead of getting one-time copies, you should be checking your credit score in real-time to track of your progress from one week to the next.
Best of all, you can do this for free without ever having to pay the credit bureaus for the privilege of seeing your score! Your credit card might include free credit monitoring as an opt-in, or you could sign up for credit monitoring through Credit Karma. Both options are free to use, and will give you much greater visibility into the gradual changes and improvements that occur throughout 2020.
Holding yourself accountable can be really challenging, especially if reaching your financial goals means sacrificing some vices. After all, substituting your spending on Chinese takeout for home-cooked meals can be difficult to stick to if you don’t have a little bit of extra accountability! Here are some good ways to own your goals, keep them top of mind, and make yourself responsible for following through:
Take the time to write your goals down on a piece of paper. It might feel a little bit tedious, but the payoff is worth it. Just the act of writing them out will give your brain an opportunity to focus and increases the likelihood that they will stick in your subconscious.
And you can do yourself one better by keeping that list somewhere you will see it often. Put your goals on a notecard and stick it to your bathroom mirror, on your refrigerator door, or in the visor above your driver’s seat. No matter where you put them, make sure they are somewhere you will see them often—you’ll thank yourself later on for the constant reminder.
Don’t be afraid to talk about your financial goals with the people in your life. This gives a whole new level of accountability—knowing that other people are aware of your goals will make you much more likely to stick to them. It also means that they can offer support and encouragement along the way, which can be a huge help.
And there’s another benefit to this, too. Financial goals one of the great equalizers: everyone has been there. Telling other people about what you want to accomplish opens the door for them to weigh in and share their own tips and tricks that they’ve put into practice in their own financial lives.
Let’s face it: your financial goals aren’t always going to align with the lifestyle that you have now. If your goal is to cut back on your spending in order to start an emergency fund, one of your sub-goals might be to decrease the money you spend on dining out, going to the movies, or hitting the town with friends.
And when Friday hits and it’s time to relax for the weekend, it can be hard to resist the inevitable peer pressure that comes along with it. Or if your family is planning a vacation that doesn’t quite fit into your budget, you might wind up caving and saying yes, when you really should be putting your financial health first.
Don’t forget that your financial situation is completely different than anyone else’s. It’s easy to get off course when you are comparing your spending and saving to other people, but try to resist this as much as possible. Being open and honest about your financial goals can be a big help here, but you should also recognize that letting other people influence your financial decisions can be a significant pitfall. Do what is right for your financial health and your goals!
Following through on your goals can certainly be challenging, but there are plenty of ways to set yourself up for success and keep progressing. Follow these five steps and you will be giving your financial health a huge head start in 2020—and who doesn’t want to start out the new year with a head start!