First of all, Happy New Year! If you have been following this blog in 2017, thank you very much for reading. Starting from mid-May last year I managed a total of 55 posts. I hope some of them were useful. Now to try and keep up that pace in 2018…
A New Year, of course, means New Year’s resolutions. Some people are very good at making and keeping resolutions, and some people let their gym membership lapse in February. Often, when you look back on resolutions that didn’t work out, you will find that it was the initial goal that wasn’t clear enough, not just a lack of discipline or willpower. So here are some simple tips for setting financial goals for the year:
Be realistic – we’d all like a million dollars in the bank, but if the number is unreachable it will be easy to give up.
Be clear – “Save more money” is not a clear goal. “Pay my credit card down to zero and have an emergency cash reserve of $10,000 by June 30th” is much better. Write it in big letters and stick it to the fridge if you have to!
Start with something you can do immediately – open excel and start a budget spreadsheet, download an app, open an account, fund an account. Find something you can take action on right now to get you started.
Stick with one or two major goals for the year and track them – if your list is too long it can become overwhelming. Start with one or two major goals, make them as realistic and specific as possible, take action immediately, and review every month.
If you are running short on ideas, here are some examples:
Track your money – if you are not clear on your income and expenditure then this is a priority. It doesn’t matter if you use a spreadsheet, an app or a blank sheet of paper. Spend the first two months of the year tracking all incoming and outgoing money so you know exactly where you stand.
Prioritise debt – make a list of your liabilities and prioritise them by interest rate. Pay the most expensive ones down first.
Cover the basics – emergency cash reserve, basic insurance cover, some kind of pension. Take care of these three things before moving on to loftier goals. Automate as much as you can.
Set a savings goal – how much are you going to save this year? What accounts are you going to max out? Start by maxing out any tax-advantaged accounts like an IRA or NISA.
Identify bad habits – are there things you need to stop doing? Whether it’s online shopping binges or overpriced lunches, see if there’s any financial fat you can cut out.
Start a side project – is there something you love that you could turn into a side business and increase your income? You never know, one day you might be able to quit the day job!
Invest in knowledge – find a book you want to read, sign up for a course, follow a blog! Educating yourself is a low-cost, high-return way to improve your financial situation. Share what you find with like-minded friends.
I hope this gives you some actionable ideas. Thank you again for reading and please feel free to comment, share and get in touch.
Wishing you all the best for a successful 2018!