The New Year is fast approaching and with it comes the inevitable push to set some resolutions. Here’s the thing, setting resolutions can be a great way to achieve goals, but resolutions can also create unnecessary stress for the person who doesn’t achieve the goals that they’ve set for themselves.
Don’t stress yourself out. Remember, the goals that you’ve decided to set are for you and you alone and quite honestly you have the power to change the timeframe, pace and focus that you place on your goals. Having some flexibility in your approach towards financial goals will help you stay focused and may help you achieve your desired results in the long-run.
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How to Set Financial Goals
It may feel overwhelming when you’re looking to change your financial life and aren’t sure where to start. Maybe you have a ridiculous amount of debt, a car that keeps breaking down or just a lack of good financial systems. Or, maybe you’re making great money but aren’t sure where it’s going. Identifying the key 3 issues with your money will help you identify the financial goals you should focus on. Here are a few examples of problems that will give you guidance on which financial resolutions to focus on.
- You keep paying your bills late. This is a huge problem that can become costly overtime. The resolution here is to get organized and use a system that helps you pay your bills on time which should be your end goal.
- You earn great money but aren’t sure where it’s going. The financial resolution here is to find a system that helps you track where your money is going. For some people this could be as simple as using one specific credit or debit card and checking your bank account to track your spending. Or, you could use a tracking software to keep you organized.
- Maybe you’re not earning enough and are trying to figure out how to change that situation. In this case, you could find a mentor within your field to give you insight into what people are earning in your role. You could research online for information on comparable wages for the role you work in other states that disclose earnings information by role. And you practice how to negotiate your compensation before going into your next review.
- Identify your primary goal-You can definitely work on several goals at one time. But, it may be easier to assign levels of priority to your goals. Your financial priorities will depend on your overall financial situation and may take some time to figure out. Give yourself a couple of days to work through your resolutions and what you would like to check off your list first.
When you’re setting financial goals, be honest with yourself. Set goals that are actually achievable. If you have $30,000 in debt but you make $50,000 a year. Paying off debt with that income is not possible in 6 months. It’s clear that you have to grow your income or change the timeframe to achieve your goal. Using an Etsy pdf debt repayment planner could be a simple way to use a visual tool to keep your repayment goal attainable. Debt Avalanche pdfs are a great way to stay organized as you pay off your debt. I’ve included a link to a tracking pdf that I think you might like.
Be flexible. Things will absolutely come up as you work towards whichever financial resolution you’ve set for yourself. Financial emergencies will happen. Your car might need to be fixed, an unexpected home repair might crop up or a family member might need some financial assistance. Basically, understand that there will be bumps along the road.
Working on managing your mindset to keep on track during tough moments will help you to avoid getting financial derailed as you get closer to the finish line. Now that we’ve worked through some of the simple logistics of recognizing your financial problem areas now it’s time to recognize 7 financial resolutions that you could work on for the upcoming year.
Simplify Your Budget
It’s my personal belief that most budgets may be too complicated and that’s why it’s hard for people to keep track of everything. If you have 8 bank accounts, 12 credit cards, 2 cars and several relatives relying you financially plus debt-your budget is likely a little complicated. There are a few ways to simplify your budget.
- Use a tool like Personal Capital, Mint or You Need a Budget that pulls all of your financial information into one easy to review place. These budget management tools are useful because they also give budgeters an idea of the leaks in their budgets (mine is coffee shop visits) once you have a visual of your budget then you can prioritize taking steps that make you life easier.
Everyone has a different financial style so it’s important to figure out which budgeting process is ideal for your life. For some reason I’m completely confused by the YNAB and Zero Budgeting Models. I don’t know why. Instead, I like to check on my bank accounts once a day and keep my overall expenses really low. This method had been really effective for me but it might not work for everyone.
Get Out of Debt
Many years ago I had a TON, A TON of unsecured debt. I’ve talked about this often in my written work and on my podcast. But, having over $60,000 in unsecured debt to many different entities made my financial life SUPER complicated and ridiculously stressful. It’s very different owing one $60,000 bill that you can hyper focus on vs. owning 30+ creditors $60,000. In my case, I began slowly but surely paying off all those creditors. It was super painful. And, I will be candid and say that it took around 4 years before I really was able to notice what a difference it made in my life to not be dealing with 30+ creditors.
- I had fewer letters from bill collectors. In fact, now I basically get only marketing stuff in the mail and birthday cards.
- No more email correspondence from bill collectors. I get a ton of emails like everyone else, but I no longer get emails telling me that I owe people money.
- The text messages stopped coming in because even bills in good standing will send notifications to remind you to pay bills on time via SMS/Text messages
Eliminating as much unnecessary debt from your life as possible is a huge way to simplify your financial life. Set a reasonable pace to tackle debt repayment goals(especially in the beginning). You want to build up momentum. One thing that isn’t discussed enough is that debt repayment speeds up towards the end of the process.
How to get out of debt?
- Track your expenses-Eliminate things that don’t make sense or help you move forward financially.
- Save money towards an emergency fund first-Why do this? Because a lot of emergency borrowing happens when you don’t have an emergency fund. Recently, I had to pay $1,000 towards a broken pipe. It was just under the $1,000 deductible for my property insurance. Luckily, I had the cash on hand.
- Side-hustles are bae-It can be tricky to find the right side-hustle for your lifestyle. But, I’m a huge fan of all of side-hustles that you can do on your own time.
- Dog walking-If you’re in a city like Denver, San Diego, New York City where there is a high rate of dog ownership and YOU LIKE DOGS-dog walking can be an incredibly lucrative and rewarding way to earn money.
- Online content creation-This can be lucrative LONG-TERM, if you want something quick do something else during the interum.
- Laundry services-Busy people need help with a lot of home services. Laundry (if you love) can be a lucrative side-hustle
- Tech support-Maybe your goal is to teach people how to use/set up tech.
- Work local events
It may take some time but there will be a point where you will really notice your efforts paying off. I am so happy that I paid off that massive amount of debt. Am I completely debt-free? No. But, my financial picture much simpler because I prioritized taking care of the unnecessary debt.
Start investing for your future
Maybe you don’t have debt but you’re hoping to start investing. Keep it simple and automate the process. Again, I think we overcomplicate what the process should look like. When I was younger I thought I had to have a ton of money to begin investing. No one told me that I could invest $10 a week and then adjust my investing goals.
- Do your research. There’s a lot of information out there and it’s easy to get confused.
- Pay attention to what well-known investors are doing. Not necessarily who they’re investing in, but their thought process around patience and long-term financial practices.
Start an emergency fund
I briefly mentioned saving for an emergency in the getting of debt section. But, I think having a well-thought out emergency fund process is a huge part of financial hygiene. Similar to flossing your teeth. You do it to avoid getting cavities and other types of tooth decay. Emergencies always happen, don’t let them break your finances.
- Determine the amount of cash you would like to save in your emergency fund.
- Bare bones budget for 3 months minus fun
- 3 months budget plus fun
- 6 months budget because you’re self-employed
- Set aside a pre-determined amount of money to deposit into your emergency fund. This could be set up via your bank account or via Human Resources if you’d like to save prior to seeing the cash in your account.
- Side-hustle to hit the amount you’d like to save.
Save money for home emergencies
Home ownership is not for the weak. And, it’s my view that owning a home is not always the best way to build wealth. Listen to my podcast episode about that here. Home emergencies always happen at the most annoying times. There was the time that I had friends coming to visit me from Europe and my hot water heater broke. Then, there was the time when my fridge died. Recently, a pipe burst in my bathroom and I had Niagara Falls raining down on me. That repair was $1,000 repair due at the time of service. Fortunately, I had that cash on hand or I would be still be swimming through all of the water that was raining down on me. We’ve all heard the financial talking point that most Americans aren’t able to deal with a $400 emergency.
Set up an automatic debit from your checking account into a savings account that you don’t look at too often. Out of sight, out of mind savings is a great way to build up emergency funds. You could also optimize checking account bonuses when opening a new account to bump up your savings faster or side-hustle your way to a home emergency account. Do keep in mind that home emergencies are both predictable and random. It’s predictable that
Save money for conference season
While there may be funds set aside for professional development by the organization that you work for, you may want access to professional development or skills not covered by your organization. Perhaps you’re looking to change industries, gain a skill set not needing in your current role or would like to focus on something for personal enjoyment. Having money set aside for professional development resources such as conferences and related travel will help you avoid agonizing over participating in an opportunity.
Here are a few tips to keeping professional development affordable.
- Spend time working through which conferences you would like to attend next year. Most conferences share their ticket prices, where they will be held and hotel information sometimes 2 years before the event.
- Volunteer or speak at an event. Both options typically provide free admission into the event.
- Split a room with another attendee. The cost of conferences can be expensive and accommodation usually tips the financial scales. Splitting a room or applying mileage points towards your reservation may be a great way to lower the overall cost of your attendance.
Using the tips above will help lower the amount that you have to budget towards conference season. Using tools such as Qube Money (a digital cash envelope system) to allocate funds into different Qubes that you can spend during your trip.
Grow your income
It’s my personal opinion that we don’t discuss often enough the importance of earning more income. There is a huge emphasis on lowering expenses and it’s an important part of managing expenses. Overspending or paying to much for goods and services can quickly wreck your budget. But, there’s a point when it just makes sense to focus on earning more money. Earning more money will help you pay off debt fast, fund your savings and pay for that epic trip to Bali you’ve always wanted to go on. The question then is the following…how do you earn more. I’ve already shared that it’s important to do market research related to the role that you’re currently working or would like to shift into. There are a few other strategies to consider.
- Change the industry that you’re currently working in to an industry that pays more. If you’re a human resource professional you could use the same skills at a business in the tech industry.
- Apply for new jobs that you’re not 100% qualified for. Men are known for applying to jobs that they’re not completely qualified for. Ladies, I need you to do the same. Remember, all jobs must train their employees before setting them loose in the office. Your goal when applying for new jobs is to show that you’re trainable. Literally, that’s it.
- Work in a different city. You could approach this in two different ways.
- Lower cost of living city-If you’re earning the same amount then this type of move could potentially boost your income.
- Higher cost of living city-Typically, HCOLA cities pay more. However, HCOLA cities also cost more. So, both of those moves have to be approached with care.
Financial Resolutions 2023
Achieving financial resolutions doesn’t have to be overly complicated. But, at the heart of most financial goals is the need to do the following: earn more and simplifying your finances. The more complicated shit gets, the harder everything else becomes. It’s crazy to think that 2023 is just around the corner. By the way, if you encounter this post in July 2023-you can still set a financial resolution. There’s no rule that says financial goals have to be set at the start of the New Year. You just need to set these financial resolutions when you have the financial and emotional bandwidth to achieve them.
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