WRITTEN BY: Janet Walker
At some point, everybody has started a new year with a New Year’s resolution, and most of them are broken well before the end of January. We typically set big, vague goals like getting healthy, losing weight, being better with our money, etc. Since we have no way to measure our success and, therefore, nothing to celebrate, we quit. Let’s talk about how you can truly change that in 2019.
First, it’s important to differentiate between goals and dreams. Dreams are long-term; goals are what you need to be focused on how to achieve the long-term dreams. There are so many times that people come in to talk with us about retirement, without ever having thought about what they need to do on a daily basis to get to said retirement dream. Winning with money happens when your co-workers all go out to eat, and you bring your lunch. You are focused on the daily grind that has to happen in order to achieve your long-term dream. Every decision matters.
So this year, let’s not set vague financial goals like wanting to be better with our money, save more, etc. Let’s be SMART about our goals.
Specific – Write out a clear and concise goal.
Measurable – Can you truly know if you have achieved it or not?
Achievable – Make it challenging, but not impossible.
Relevant – Be sure that it matters to you!
Time-bound – The goal must have an end date by which you will accomplish it.
Here are some sample financial goals for you:
- Save $2,000 for emergencies by June 30, 2019.
- Contribute $1,500 more than last year to my 401(k) by December 31, 2019.
- Create a monthly budget for our family by January 31, 2019.
You get the idea. Be SMART, and move yourself and your family forward financially in 2019. Now, it’s time for some reverse-engineering from these goals to see what needs to happen daily to make them a reality. As an example, if you want to contribute $1,500 more than you did last year to your 401(k), how do you make that a reality? You can’t wish it into reality. What’s the answer? Well, one might be this: If you currently eat out for lunch 5 days a week, change it to 2. If you spend a conservative average of $10/lunch, you will now save $30/week. That $30/week is on a post-tax basis, and your contribution is pre-tax. So that’s really more like $40/week that could be added to your 401(k). Allowing for 2 weeks of vacation, you could actually add $2,000/year to your account. By the way, that’s just your portion; it doesn’t count the match or any growth. Large accounts grow from small changes and small contributions.
Everybody has different financial goals. If you need help creating SMART goals for your family’s finances, we are here to help you be SMART with your money whenever you need us.