The approach of a new year has me thinking about goals and resolutions. Goal setting is an ongoing process that I’m continually addressing with clients throughout the year. However, I think this is a unique time to reflect on goals you set this past year (both financial and otherwise) in addition to creating goals for 2014.
Now is the time to consider what was effective and what can be improved. Did you accomplish your goals? Perhaps it’s hard to know. We want to take the time to revise our goals in order to be effective next year. One common pitfall is being too general. Our goal might be to “spend less” or “pay off my debt.” Instead, be specific: “I will cut $200 from my budget each week,” or “I will pay off $500 on my highest interest rate credit card each month.”
I outline the following goal setting tips in a SaveUp webinar about organizing your finances and , “Personal Financial Organization and Goal Setting.” To view it, log in to SaveUp and click “webinars” on the left hand side.
Realistic – Create realistic goals. This will help you stay on track to accomplish your goals. It is important to remember goals can be adjusted. Don’t be afraid to change the dollar amount, or timeline, for example, if necessary.
Quantifiable – Come up with a goal that you can define and measure. Give it a dollar amount and create incremental targets along the way. This will make the goal manageable and help you make adjustments which will likely be necessary.
Timeline – A timeline creates a sense of urgency. It helps you incrementally track progress you are making to accomplish your goal.
Other strategies to improve the effectiveness of goals include; writing down your goals, partnering with someone who will help you stay on track and keep you accountable, and seeking professional help to kickstart your goals. Here is a link to a Spreecast hosted by the Wall Street Journal titled Making Realistic Financial Resolutions. The panel of experts offers insightful information on this topic. It is well worth the 30 minutes it takes to watch. They recommend creating habits with automatic savings and examining what motivates you before setting your goals. They also include examples of goals to set given different age groups.
I hope this time of reflection will help you create meaningful goals so that in 2014 you continue to SaveUp!
This post was written by SaveUp’s personal finance contributing writer, Catherine Hawley, CFP®.
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