Setting Financial Goals for the New Year

6a0133f3fc5805970b0147e125b457970b-320wiAs we close out a year that has been a financial struggle for many family child care providers, let’s pause to count our blessings with family and friends. Let’s also hope that the next year will be better for us all.

It’s not too early to think about setting financial goals for the year.

Sometimes the hardest thing to do is to take that first step and set goals for yourself and your family. If the task seems too overwhelming try to set goals that are more manageable. Here are some suggestions. Your financial goals may be different.

1) Capture the employer match for retirement contributions

If possible, try to contribute enough to your spouse’s 401(k) plan in 2011 so you can receive the maximum employer matching contribution. This is free money and should be high on your list of priorities for the year.

2) Gain more control of your expenses

Seek to reduce or eliminate your credit card debt. If you can’t pay off your credit card in full at the end of each month, this is a sign of over-spending. If you have an unpaid balance, start by paying off any new spending each month.

3) Establish a three-month emergency fund

Life is full of unknowns, so set up an emergency fund to cover the unexpected (house repair, medical bill, loss of clients, etc.). Start by setting a smaller goal of a one-month emergency fund for 2011.

4) Set up a car replacement fund

Borrowing money to buy a car means you are paying interest for something that is decreasing in value over time. Ideally, you should pay cash for your next car. If this won’t be possible, start saving in 2011 for your next car so you can increase your down payment substantially.

5) Purchase insurance

Protect yourself against the major risks in your business by purchasing business liability insurance. Many homeowner’s and car insurance policies do not cover family child care providers. Contact your insurance agent for an annual insurance checkup to make sure you are adequately covered. See this online insurance directory.

It may not be possible to reach all your goals by the end of 2011. Don’t be discouraged. Try to set reasonable goals and measure your progress each year. Taking small steps now will make a difference in the long run.

What financial goals will you set for the year?

Tom Copeland –

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Money Management GuideFor more information on retirement planning, see my book Family Child Care Money Management and Retirement Guide.

Categories: Money Management, Money Management & Retirement

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2 replies

  1. I would STRONGLY encourage everyone to check up on their insurance! I had to switch our home owners insurance to a different company that would “cover” me because of daycare. I did some investigating after Tom cautioned about checking how much of your personal belongings would be considered “business property” if you had a total loss. My agent said “well yeah, I can’t see why it wouldn’t be covered. Yeah, it would be fine.” but a phone call to the actual company revealed differently!

  2. Jennifer – I’ve heard from many other providers who’ve had the same experience as yours. Don’t assume your home owners insurance covers your home and its contents. Contact your insurance agent and get it in writing.

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