7 Financial Goals for the New Year
The new year has already begun, which makes now a great time to review your finances and set financial goals for this year. When setting financial goals it’s important to determine your short-term, mid-term, and long-term goals. Based on those goals, calculate definite amounts you would like to save, invest, spend and set a specific plan in place. Don’t forget to revisit your goals often so that you can keep track of your progress and refine your plans along the way. This can be done on a monthly or quarterly basis, whatever timeline works for you. Now that you know how to set financial goals here are 7 financial goals you can aim for in the new year.
1. Review Your Financial House of Last Year
The first step is to review your personal finances this past year. If you have a set budget plan look over the year’s spending, saving, and investing. Take note of what worked and didn’t work and refine your budget plan for the new year. If you don’t have a budget plan yet now is the time to set one up. Without keeping track of personal finances it’s hard to set up other financial goals. There are plenty of resources out there to help you create a budget like Mint, Budget Tracker, or You Need A Budget.
2. Get Rid of Debt
Another great financial goal is to get rid of debt. It can be any type of debt: school debt, credit card debt or house debt. By getting rid of your debt you’ll be able to have full control of your income, which allows more saving, investing, and even spending. Another financial goal is to stop acquiring new debt. By not creating new debt there is more opportunity to pay off other debt. Some ideas are to continue driving your car even after the payments are done, deciding not to buy anything that you can’t afford to pay in cash for, or refinancing your home.
3. Emergency Fund
An emergency fund is important for financial stability. Although it is a short-term financial goal it has long-term benefits. Emergency funds are there for unexpected emergency situations like a job loss or sudden medical expense. The emergency fund amount should be able to cover living expenses for a few months. Setting up automatic deposits for the emergency fund will make it easier to reach the financial goal. Once the amount has been fully funded you can set all the extra money into your retirement plan or investments.
4. Retirement Planning
If you have a retirement plan, now is the time to increase your contributions to your 401(k) or other retirement plans. Don’t have a retirement plan yet? Start one for the new year. If your employer offers free matching for your 401(k) definitely take advantage of that contribute as much as possible. If you’re self-employed set up an Individual Retirement Arrangement (IRA), either traditional or Roth, or set up your own retirement plan. A good retirement plan timeline to have is to set it up as if you were planning for early retirement. On average, people retire around the age of 65 in the U.S. Setup your plan as if you were retiring by the age of 50. By doing so, this gives you extra time and flexibility case you are behind or if an unprecedented event occurs causing you to actually retire early.
5. Reassess Your Insurance
This is also a great time to review all your insurances to make sure that you aren’t paying too much or too little. Be sure to check all insurance types: life insurance, auto insurance, and health insurance. You may need to do a little research to determine the best plans and rates for you and your family.
6. Re-evaluate Your Investment Portfolio
Checking your investment portfolio once a year or when there is a big life change like a new job, marriage, or kids is a good way to manage your portfolio. Now that the year is coming to an end assess the health of the investment portfolio. Determines how your assets are doing and revise your portfolio if needed. Also, re-examine your risk tolerance so that you feel you feel confident in your investments. This is important because you want to make sure that you’re investing your money as well as possible. If you have any questions or concerns talk to a financial advisor. They can help you analyze and determine the best plan for financial growth.
7. Gain financial knowledge
With the new year and new resolutions, spend some time learning more about personal finances and money management. You can read blogs, news, and books to become more financially literate. There are also great podcasts and audiobooks that you can listen to. There are plenty of resources out there to help you learn more and manage your money well.
By setting one or more of these financial goals you’ll be on the path for financial growth and success for this year. If you have questions or would like to learn more about mortgages send us an email to [email protected] or give us a call at (800) 346-8047.