5 Financial Goals for the New Year
The new year is right around the corner and everyone is having resolution fever.
“I want to make more money!”
“I want to pay off debt!”
“I want to stop spending so much!”
These financial goals are well and good — but they’re not specific enough for setting financial goals and staying motivated and accountable. In fact, last year a survey by Statista showed that respondents’ number one new year’s resolution was to save more money. This exceeded the desire to lose weight. But the reality is that most people fail and don’t reach their New Year’s Resolutions. So we’re going to share with you five specific financial goals for the new year that you can work toward.
1. Save 10 percent of your income
You might have heard the saying “pay yourself first.” But no, really, you should pay yourself first to meet your financial goals. What that means is that instead of paying bills and everything else and THEN seeing whatever is leftover for you, you will flip the script. You will save FIRST then pay your bills. Set your goal to save 10 percent of your income this year. So if you make $3,000 per month, that means you’re saving $300 per month.
Depending on where you are at, this can seem tough at first. But look at your unnecessary expenses and see which ones need to end up on the chopping block in order to meet your financial goal. If you’re already meeting this goal, double or triple it. The key to getting started is through automatic withdrawals. You don’t have to think about it. You can schedule it so that money just transfers from your checking to your savings after every pay day.
2. Max out your retirement
It’s easy to live with a YOLO attitude, especially with everything going on in the world. But that doesn’t mean you should jump ship on your future self just yet. You should still set financial goals and work toward saving for your retirement. Not only that, but maxing out your retirement (especially if you’ve funded your emergency fund and you’re prepared for your medium term goals).
In 2019, you can save up to $19,000 in your 401(k). For Traditional and Roth IRAs, you can save $6,000 in 2019 to meet your financial goals. Although it’s ideal to save in your 401(k), especially if there is a match, if you can only max out your IRA, do that (but contribute up to the match in your 401(k)).
Maxing out your retirement with one specific retirement vehicle can help move the goal needle forward so you are preparing for your future.
3. Increase your net worth by $12,000
For 2019, your goal should be to increase your net worth by at least $12,000. Say what? That might seem crazy.
First, a crash course in what ‘net worth’ actually means. Your net worth is your total financial value -- assets minus liabilities. So you would take all of your cash value, investments, etc. and subtract your expenses, debt, etc. That’s your net worth.
So increasing your net worth by $12,000 doesn’t necessarily have to come just from earning more. It can be paying down debt, too. Let’s say you paid down $6,000 in debt, added $3,000 to cash savings and $3000 to retirement, that would do it.
Whatever way you do it — whether through paying down debt, saving, investing, all of the above — strive for this minimum. Of course, more is always better when trying to meet all of your financial goals.
4. Commit to one no spend day a week
Spending is where all of our financial goals can go haywire. Too many happy hours, an unexpected Seamless order, and too many hungover Uber rides to count. It happens. Don’t beat yourself up about it. But the key for the new year is to become more mindful of your spending habits. You want to commit to one no spend day per week.
That means spending no money at all. No coffee, no food, no clothing. Of course, your food and transportation needs will need to be covered during this time, but generally speaking you can go one day without spending any money.
When you spend no money, you can be more cognizant of your spending habits and your financial goals will become easier to achieve. On top of that, you can build momentum and continue to not spend. So many of us are used to spending as a default, this exercise can truly be eye opening.
5. Track your expenses every day
You’ve created a budget for the new year (RIGHT?!). You’ve committed to a no spend day each week and saving 10 percent of your income. You’re all set right? Wrong. You need to track your expenses.
Yes, every single day. How can you actually know if your financial goal is on track if you don’t track? How can you know your spending triggers if you don’t track? You can’t. That’s why it’s key to track your expenses every day. You can try pen and paper. Excel spreadsheet. Financial apps like Mintor Tiller. Whatever works. But find something that works and keep tracking and meet all your goals!
There’s a lot of buzz around the new year around changing your life and your finances. And we totally believe you can do it, but you can do it the smart way. You can start with actionable, specific steps. Start setting financial goals for the new year now. If you need a little extra help, no shame. Get in touch and we’ll hook you up with your new Best. Financial. Friend. (B.F.F.).