5 Financial Goals for the New Year

The new year is here and now is the time to create financial goals to help you get on track and set yourself up for a more financially stable future. Sometimes getting your finances organized can be a daunting task, but by setting a few yearly goals it can be easier than you think. Start the year off right by getting started on the five financial goals listed below.

1. Draft a Monthly Budget

Even though this may seem like a common goal, many people find it hard to complete this task each month and stick to it. A monthly budget is the beginning of gaining better control of your finances and the more detailed, the better. When creating your budget, make sure that every penny is accounted for including savings, investments, clothing, food, entertainment, etc. It will not only help you realize what you spend each month, but it also will help direct your focus on areas where you can improve and goals you can set for the extra money you may have when sticking to your budget. 

2. Take Control of Your Debt

Debt can be one of the primary factors that can hold you back from financial success. Make a reasonable plan to reduce your debt and stick to it. You can start by determining a reasonable amount of debt that you would like to reduce for the year, making sure that the goal is attainable. Next, determine how much you will need to pay each month in order to reduce your debt by the goal amount. Finally, you will need to look at your budget and find a way to fit this amount each month, even if it means cutting back on other areas of the budget. It is also important to make sure that you do not add any more debt throughout the year.

3. Make an Emergency Fund a Priority

Medical costs, major vehicle repairs, job layoffs, or house maintenance can quickly derail a budget. Make sure that you have a fund set up specifically to handle these unforeseen expenses so you don't have to alter your monthly budget to accommodate. The general rule of thumb for an emergency fund is to have three to six months of monthly expenses. This helps you cover larger sudden expenses, such as vehicle repairs or medical bills, as well as your living expenses should you lose your job. If you need time to build your three to six month emergency fund, a good way to start is with one month of income plus $1,000. Once this goal is achieved, you should keep saving until you have the right amount for your full emergency fund. As you build you emergency fund, if you need to use it for an emergency during the year, you will need to continue saving so you can regrow it. 

4. Prioritize Retirement Savings

Saving for retirement is something often put on the back burner until it is too late. The sooner you begin saving for retirement, the more time it will have to grow and the better return you will have on your investment in the long run. Work with your financial advisor to determine what retirement savings vehicles may be best for you.

5. Create a Long-Term Financial Plan

Goals can be more difficult to set if you are having difficulty envisioning the rewards that will come with financial stability. Consider any long-term financial goals you may have such as buying a new house or retirement. Draft out a plan that includes savings, investing, and other ways to build the wealth you need to achieve these goals. You can start with smaller goals, so they seem less daunting. Having a plan in place will help you stay on track and guide your financial decisions. 

Make this year the year you take control of your finances and get on the right track to achieving your future goals. Consider the five financial goals listed above to help you get started, and if you need help setting more goals or establishing a plan to achieve your goals, Escient Financial is here to act as your financial planner and investment advisor. Feel free to...