We may already be into the second month of the calendar year, but it’s never too late to create new goals, especially when it comes to your finances. Financial goals help determine your decisions and influence your behaviour. They help you figure out what’s really important to you – what you can afford to spend, what you need to save for, and how much you can afford to invest.
Your financial goals will change as your life changes. What now takes a front seat may not have even been on your radar five years ago, and in the next five years, your goals could change drastically, depending on what happens in your life. Know that that’s totally okay – life is about going with the flow! But for now, it’s important to focus on financial goals that suit your lifestyle today. Take a look at 8 savvy financial goals you should be making this year.
1) Make Specific Financial Goals
Having specific financial goals is important for so many reasons. Instead of simply putting money into a savings account, plan out what you’re saving for. If you’re planning to buy a home, how much do you need to save for a down payment? How much do you want to put away for retirement? How much do you want to save for travel throughout the year?
Having specific financial goals will help you stay on track and make it easier to create a budget for yourself (see below!) based on what you can afford to spend, save and invest. Review your goals and your progress towards them. Do this every month, quarter or year, whatever works best for you, and make any changes you need to along the way.
2) Create a Monthly Budget and Track Your Spending
If you haven’t created a budget for yourself yet, it’s time to start! Having a budget ensures you don’t spend on unnecessary things and that you stay on track with your financial goals. And remember, everyone’s budgets will be different. Don’t feel like you need to create a budget that looks exactly like someone else’s.
I like to create monthly budgets for myself. I feel like keeping track by month works really well for me, but perhaps you want to create a weekly or bi-monthly budget for yourself. Do whatever works for you and your lifestyle! Your budget will depend on how much you make as well as your fixed and variable expenses. If you want to know more about creating a budget, check out my post on simple personal finance hacks that will make you wealthy.
3) Start an Emergency Fund
Starting an emergency fund is one of the most important financial goals you can have. The money you put into this fund is purely for emergencies. Let’s say you work from home and your laptop completely dies, or there are unforeseen medical costs or car repairs you have to deal with. God forbid, you lost your job and couldn’t find another one for a few months.
Your emergency fund is there to get you out of sticky situations. It’s not there to spend on a vacation or splurge on your latest handbag obsession. If you’re wondering where to start, put $500 aside. Work up to a fund that could back you if you were out of work for three to six months. Even if you can put aside $40 to $50 per week, that equates to $2,000 to $2,600 in a year.
4) Only Spend money you Have
This sounds obvious, but thanks to credit cards, it’s pretty easy to spend money you don’t have. Credit card debt is one of the worst types of debt you can have and unfortunately many people get stuck with it. It can be tempting to spend money you don’t have, but make a resolution and promise to yourself now to only spend money you actually have in your bank account.
Now, there are always exceptions. If you’re spending money to invest in a new business for example, this is an investment that can be worth spending money you don’t have, if you think there will be a big payoff in the future.
5) Save for Retirement (Set Up Auto-Saving)
It’s never too early (or too late) to start saving for retirement. The earlier you start, the less you need to put away each month/year to get to your retirement goal and the earlier you can retire!
Set up an auto-saving system where a percentage of your pay cheque automatically is put into your retirement savings plan. If you’re self-employed like me, you’ll have to do this yourself, so you have to make sure you’re vigilant about it – make sure to look into your options!
Saving for retirement ensures you can live the lifestyle you want when you stop working.
6) Educate Yourself About Money
Read books about money, listen to financial podcasts about saving and investing, talk to a financial advisor about what to do with your money.
Educating yourself about your options when it comes to finances is one of the best things you can do for yourself. There’s always more to learn, and it feels really good to feel good about where your money’s going.
7) Create a Bottom line
I’m reading the book You Are a Badass at Making Money by Jen Sincero (I highly recommend this book for everyone!). One of the suggestions she gives is to create a bottom line for yourself (page 180). For example, make sure to always have at least $500 in your checking account.
Whenever it gets close to that amount, start getting tighter with your money or find another way to bring in more cash. As you start making more/being more vigilant with your money, you can begin to raise your bottom line.
8) Invest In Yourself
This could take on many forms, but start getting real about what’s really important to you and invest in yourself. Is it important to you to have a well decorated home you love waking up to every day? Is it important to you to become one of the best in your industry? Are you devoted to traveling as much as possible to learn about new cultures and take in the beauty of the world?
Whatever’s most important to you, spend your money investing in that. Instead of buying a latte every day or ordering takeout for most of your meals, put that money aside to invest in whatever it is you know is going to take your life to the next level.
What personal finance goals are you setting for yourself this year? I’d love to hear about what you’er making a priority!
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