The new year is here, which means it’s a great time to hit the reset button and commit to new financial resolutions.
Looking for ways to make sure you don’t abandon your financial resolutions before Valentine’s Day? We’ve got you covered. Here are some tips for setting financial goals that can evolve into sustainable habits.
Set Goals You Know You Can Actually Reach
Eighty percent of New Year’s resolutions fail by February, and there’s a big reason why: It’s tempting to set your expectations way too high, resulting in burnout and abandoned goals.
If you’re serious about reaching your financial goals, start with goals that are realistic, even if they seem a little low at first. When you’re starting a monthly savings plan for the first time, don’t overwhelm yourself by setting a goal you’ll be hard-pressed to meet every week. A savings goal as small as $25 per month gives you a goal you should be able to meet—and as you make a habit of hitting this goal, you can start to think about increasing your contribution.
Remember, you can always exceed your goals if you’re doing well in a given month. But a practical approach to goal-setting will make it easier to gain momentum and stick to your plan during the months ahead.
Want to see how your savings can grow over time? Our Savings Calculator can illustrate your earnings potential to offer an added incentive.
Create a Budget That Accounts for These Goals
Let’s say you’re looking to bump up your retirement savings this year. To make it happen, you’ll need to account for this increase in savings in your budget.
No matter how ambitious you may be, your income and expenses can’t work magic. By using your budget to account for these new goals, you will be more likely to achieve them, and you’ll also be more aware of your spending. Want some help creating a budget? Our Budget Calculator is a great tool.
Seek out Accountability
Who will you have to answer to if you don’t reach your financial goals? It helps to have other people involved in your goal-setting so they can help you stay committed and motivated.
This could be a spouse, a coworker, a financial advisor, or another person who is familiar with your finances and your financial goals.
You could also consider setting up a rewards system: Allow yourself a special indulgence every month if you’ve met your financial goals.
Use Smaller Goals to Build Toward Larger Goals
For most consumers, reaching a major financial goal such as saving for a home down payment doesn’t happen overnight. To achieve those milestones faster, consider using short-term savings goals to build toward those efforts.
Let’s say you anticipate needing three years to save up a down payment to afford the kind of home you are hoping to buy. Divide that amount by 36 months, and commit to making monthly contributions to stay on track to reach this goal.
Want to give your savings goal a little boost? Deposit those saved funds into an interest-bearing savings account. At the end of those 36 months, you’ll have a little extra money to help you cover any unexpected or last-minute costs that arise during the home-buying process.
Use Automated Savings Tools When Possible
If you have difficulty remembering to add to your savings goals, try using automated transfers to ensure those contributions are made every month.
If you’re saving up for a new car, for example, you can set up an automatic transfer of your monthly savings amount from your checking account or paycheck into your savings. By using these automated tools for saving, you’ll be less tempted to spend the money elsewhere.
Financial goals only have an impact if you’re able to follow through on your plan to reach them. Once you’ve figured out your financial goals, make sure you have a system in place to help you stay disciplined and focused on the long-term rewards.