As the festivities wind down and the new year unfolds, now is the prime time to start setting financial goals. If you’ve recently found yourself splurging on gifts and vacations, you might be ready to whip your finances into shape. You’re in good company; a January 2024 Pew Research Center survey found that among the 30% of Americans who made New Year’s resolutions, 61% set at least one financial target.
It’s easy to feel a burst of motivation, determined to tackle all your financial issues over the coming months. Yet, it’s also easy for life’s daily distractions to push those well-intentioned plans into the background. The harsh truth is that most New Year’s resolutions are left unfulfilled.
So, how can you tilt the odds in your favor? The key lies in recognizing that you won’t have the time or energy to perfect every task on your list. Setting up a practical system to help you prioritize, plan for the future, and stay accountable is crucial.
Many people kick off by cutting unnecessary expenses, which can surely help. However, there are often overlooked strategies that can have a more significant impact. Taylor Schulte, a certified financial planner and founder of Define Financial in San Diego, recommends starting with some often-neglected financial actions.
Freezing your credit is a quick, straightforward measure to shield yourself from identity theft. It’s completely free and only needs to be temporarily lifted when applying for loans or credit cards. Schulte also suggests exploring umbrella insurance, which offers additional protection beyond your current auto, home, and other insurance policies. This extra coverage can save you from huge out-of-pocket expenses if you ever face a lawsuit.
Putting some basic estate planning in place, like drafting a will, is another task that deserves attention. Delaying this can cause significant headaches for your family if something unexpected happens. “I realize it’s a chore often postponed,” Schulte notes.
While it’s essential to monitor your spending, don’t overlook steps that can protect your resources, yourself, and your loved ones.
Often, financial goals emerge from societal pressures—you might feel compelled to save for a home even if you enjoy renting, or to forsake current joys for retirement savings, only to feel unsatisfied. However, your money goals should genuinely reflect what matters to you personally. Goals not connected to your core values can quickly lose their appeal.
“If you’re unsure about which goals to pursue, revisit your values and let them guide your objectives,” suggests Eric Roberge, a certified financial planner and founder of Beyond Your Hammock in Boston.
You can couple goal-setting with a bit of planning to prevent unexpected expenses from sneaking up on you throughout the year. Project what costs you anticipate in the next six to twelve months—be it regular bills, vacations, or potential car or home repairs. This forward-thinking approach allows you to allocate funds monthly for both anticipated expenditures and longer-term aspirations.
Reminding yourself of your goals can be an uphill battle. To help make them stick, jot them down. Whether it’s a handwritten overview on your fridge or digital reminders nudging you now and then, both work well.
For time-sensitive objectives, assign deadlines. Creating lists based on what needs tackling within the next week, month, or three months is one strategy. As you make progress, update your list.
Inviting others to join in can amplify your efforts. Scheduling regular family budget meetings can be beneficial if managing finances collectively. Alternatively, share your objectives with a friend or family member who can keep you accountable. Having loved ones involved can keep you motivated. “We’re often okay with letting ourselves down,” Schulte points out. “But letting others down isn’t something we take lightly.”
When choosing a high-yield savings account, credit card, or investment options, it’s easy to get stuck in the decision-making loop, aiming for the perfect choice. Instead, strive for a good-enough decision. Taking decisive action often yields greater benefits than postponing decisions until every detail is perfect.
Roberge acknowledges his preference for optimizing each financial decision but recognizes that doing so often leads to inaction. “Moderation in everything is a personal principle,” he shares. “Going overboard in one area doesn’t work long-term when it harms other important aspects of life.”
