The new year is here, and now is the time to create financial goals to help you set yourself up for a more financially stable future. Sometimes, getting your finances organized can be a daunting task, but setting a few yearly goals can be easier than you think. Start the year off right by getting started on the five financial goals listed below.
1. Draft a Monthly Budget
Even though this may seem like an obvious goal, many people find it hard to draft a budget each month and stick to it. A monthly budget is the beginning of gaining better control over your finances, and the more detailed it is, the better. When creating your budget, make sure that every penny is accounted for, including savings, investments, clothing, food, and entertainment. It will not only help you realize how much you spend each month, but it will also help direct your focus to areas where you can improve and help you decide where to allocate the extra money you get from sticking to your budget.
2. Take Control of Your Debt
Debt can be one of the primary factors that can hold you back from financial success. Make a reasonable plan to reduce your debt and stick to it. You can start by determining a reasonable amount of debt that you would like to pay off for the year, making sure that the goal is attainable. Next, determine how much you will need to pay each month to reduce your debt by the goal amount. Finally, you will need to look at your budget and find a way to fit in this amount each month, even if it means cutting back on other areas. It is also important to make sure that you do not add any more debt throughout the year.
3. Make an Emergency Fund a Priority
Medical costs, major vehicle repairs, job layoffs, and house maintenance can quickly derail a budget. Make sure that you have a fund set up specifically to handle these unforeseen expenses so that you don’t have to alter your monthly budget to accommodate. A good rule of thumb for an emergency fund is to start with a month’s income plus $1,000. Once this goal is achieved, you should keep saving until you have about six months of expenses. Budget an amount each month for your emergency fund. If an emergency were to require the funds sometime during the year, you will need to regrow it.
4. Prioritize Retirement Savings
Saving for retirement is something often put on the back burner until it is too late. The sooner you begin saving for retirement, the more time these savings will have to grow and the better return you will have on your investment. Work with your financial advisor to determine which retirement savings vehicles may be best for you.
5. Create a Long-Term Financial Plan
Goals can be more difficult to set if you have difficulty envisioning the rewards that come with financial stability. Consider any long-term financial goals you may have, such as buying a house or retirement. Draft out a plan that includes saving, investing, and other ways to build the wealth you need to achieve these goals. You can start with smaller goals so that they seem less daunting. Having a plan in place will help you stay on track and guide your financial decisions.
Make this the year that you take control of your finances and get on the right track to achieve your goals. Consider the five financial goals listed above to help you get started.
As always, let us know if you have any questions.
CRA Investment Committee
Matt Reynolds CPA, CFP®
Tom Reynolds, CPA
Robert T. Martin, CFA, CFP®
Gordon Shearer Jr., CFP®
Jeff Hilliard, CFP®, CRPC®
Joe McCaffrey, CFP®
Phillip Tompkins, CFP®
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