Setting Financial Goals for the Year

Setting financial goals is an important step in better managing our money.

Most of us spend more time planning our next vacation than we do planning our financial future.

But, unless we do set goals it will be unlikely that we will make much progress in improving our financial situation.

So, it's never too late to identifying several financial goals you would like to achieve by the end of the year. They can be short or long term goals, or a combination of both.

Because it can be hard to take the first step, here are some suggestions. Your financial goals may be different.

1) Capture the employer match for retirement contributions

If your spouse has a 401(k) or 403(b) IRA plan at work, make sure hecontributes enough so he or she receives the maximum employer matchingcontribution. This is free money and should at the top of your list ofpriorities for the year.

2) Gain more control over your expenses

Seek to reduce or eliminate your credit card debt. If you can’t payoff your credit card in full at the end of each month, this is a sign ofover-spending. If you have an unpaid balance, start by paying off anynew spending each month. If you can’t pay off this debt in one year, tryto reduce it by half or a third.

3) Establish a three-month emergency fund

Life is full of unknowns, so set up an emergency fund to cover theunexpected (house repair, medical bill, loss of a family, etc.). You maywant to start by setting a smaller goal of a one-month emergency fundfor the first year.

4) Set up a car replacement fund

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

5) Save at least 10% of your profit for your retirement

The sooner you start saving for your retirement, the better. 10% is areasonable goal if you are in your twenties or thirties. If you areolder, saving 20% should be your goal.

These five financial goals may be very different than the ones thatmake sense for you. You may only want to set one or two goals this year.

Once you set your goals, monitor them throughout the year. At the endof the year, measure how well you have done and then set new goals forthe next year

Don’t be discouraged. Don’t worry if you don’t meet all of your goalsfor the coming year. It’s more important to regularly set goals andmark your progress. Doing so will make it much more likely you will meetthem.

Taking small steps now will make a big difference in the long run.

What financial goals will you set for the rest of the year?

Tom Copeland – www.tomcopelandblog.com

Image credit: https://www.flickr.com/photos/68751915@N05/

For more information, see my book Family Child Care Money Management and Retirement Guide.