2023 Financial Goals Resolution
For many of us, we set typical goals for the new year, such as lose weight, exercise more, or go someplace we’ve never been, but if there is one New Year’s resolution that will bring you peace of mind, less stress and anxiety, it’s to create your financial goals.
Financial goals are typically categorized in three different ways: short-term, mid-term, and long-term financial goals.
Short-term financial goals are things that you may want to accomplish within 12 months like saving for a family vacation. Mid-term goals are things that you want to accomplish in 5-10 years like saving for a down payment on a house or paying off a credit card. Long-term goals are financial goals that you’d like to achieve within more than 10 years, such as investing in your child’s college tuition, saving for retirement, or paying off you house.
You can make tracking your progress easy by breaking your 12-month goals down into daily, weekly, or monthly goals.
Your financial goals should be very specific, measurable, attainable, realistic, and with a time limit. This is what you would call a SMART goal.
Specific: Specify the tasks you need to complete to reach your goal.
Measurable: Decide how you will track your progress.
Attainable: Set realistic expectations and evaluate your progress.
Relevant: Consider if the goal aligns with your values and your desires for the future.
Timeline: Set timelines for reaching your goals and break down large goals into smaller tasks that have their own deadlines.
SMART Goal Example: I will meet with a financial advisor by January 28, 2023. I will create my financial SMART goals for 2023 by February 1, 2023, I will set myself a reminder to schedule a 3-month follow-up meeting on May 1, 2023.
Perhaps you’re struggling on what financial goals you’d like to set for yourself. Here are eight financial New Year’s resolutions to help you meet your financial goals.
- Calculate your net worth: Your net worth is the total of your assets minus your liabilities. Make a list of your assets (what you own) and your liabilities (what you owe). Subtract the liabilities from the assets to determine your net worth. Net worth is the best way to understand your financial health and to see where you may need to make improvements. Calculate your net worth.
- Set a budget: Start tracking your spending and set up a budget using a simple spreadsheet or app. List all your fixed expenses, such as mortgage/rent, phone, utilities, and auto. Financial experts often recommend the 50-20-30 approach: Allocate 50% of your income for expenses, 20% for building your savings and paying down debt and 30% for wants. Make use of U1’s Online Banking Money Management tool to track accounts from all your financial institutions and set parameters to reach your goals.
- Pay off your credit cards: Set a realistic budget and try not to charge additional purchases until the cards are paid off. Consider transferring your credit card balance to a new card with a lower interest rate or even an 0% promotional rate. Once accomplished, it’s best to pay off your card balance in full every month, ALWAYS! Not only will you save money on incurred interest rates, but you will also increase your credit score. Plus, the extra money you save can go into your savings account or help to pay down debt. At U1, whether it's a balance transfer or secured card to build your credit, we cut the fluff to offer what matters - a simple low rate and no hidden or big bank fees. Find the right card for you on our quick and easy online or mobile-friendly application.
- Build an Emergency Fund: Having money saved for unexpected events helps protect you from a financial catastrophe in the event of unexpected unemployment or major medical expenses. Emergency funds need to support 3– 6 months of living expenses. Once you’ve saved 3-6 months’ worth of living expenses in a traditional savings account via direct deposit, consider savings somewhere where your money can grow, like a high-yield savings account or a certificate of deposit “CD”, which typically have higher savings rates than traditional savings accounts. U1 savings prepares for your future by meeting you where you are today with a variety of saving options.
- Take the NO SPEND challenge: Pick a month and spend absolutely nothing on things you WANT. If a month is too daunting for you, start with one week, then place your extra money into your savings account or emergency funds account and watch it grow.
- Take the $1- or $20-dollar savings challenge: Saving one dollar a day will net you $365, while saving $20 dollars a week will gain you $1,040 a year.
- Retirement Savings: Try to make sure your 401(k) contributions, including any company match, total at least 15% of your pay. Take advantage of catch-up contributions if you are age 50 or older and make your retirement contributions automatic. Consider creating an individual retirement account (IRA). You have two options: a traditional IRA or a Roth IRA (learn more link). The earlier you start investing, the more money you will have in the future.
- Talk to a Financial Advisor: Effective financial planners provide guidance that help you reach your financial goals. Your financial plan should begin by answering the question: “What do I want my life to look like X years from now?” Once you’re clear on that, you can create a roadmap for your finances to support that lifestyle.
With so many options and possibilities out there, planning your financial future can be a confusing journey. That's why the professionals at U1 Financial Advisors are here. Set up an appointment to learn more about saving for retirement, IRA's or investing to achieve your 2023 New Year’s Financial Resolutions.
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