Start the new year off on the right foot with a fresh look at your financial goals. Let January 1 be the first day that you put into place a brand-new set of achievable benchmarks to master your money, deal with your debt and improve your credit score.
Successful goal-keepers know that financial independence comes with no shortcuts and that the path to a secure future requires strategies and tactics aimed at a combination of short-, mid-, and long-term outcomes that work in your favor.
Short-term goals are things you want to do with your money in the next few months or years. For example, saving for an emergency fund of at least $500 to cover unexpected crises is a goal that for many seems reasonably achievable in six months.
Along the way, successful goal-keepers will come to learn how to set a budget, how to prioritize and evaluate risk, and even begin to pay off their debt, all in service of the savings goal.
DECU has practical lessons in establishing and maintaining a budget and offers members Six Practical Reasons Why You Should Create A Budget at the following link.
A mid-term goal may include saving for a substantial purchase that you wish to make with cash rather than credit. On this list, many goal-keepers place a new vehicle or the down payment for a house or perhaps long-needed home renovations, while others save in the mid-term for a vacation or to pay down any lingering student debt.
DECU has tips to help members set and achieve the mid-term goal of saving for a down payment on a house at the following link.
Long-term goals for a wide selection of people might include a retirement fund, eliminating all non-mortgage debt, and the creation of an education fund for children.
Setting these goals for your future is important in your quest to become more financially secure, and adding specific measures to address different timelines puts clarity and purpose around your efforts.
Without specific financial goals, your next unexpected crisis could play out with negative consequences in ways you can’t always predict.
In any case, it’s important to remember that financial goals are not the same as investment advice, and there’s a big difference between financial tools and putting your money to work.
The SMART Goal-Keeper
Time management is critical, and one sure-fire way to measure whether your targets fit into the time frames set for you is to perform the following simple self-test for each of your financial goals.
- When is the deadline to get it done?
- What can I do six months from now?
- What can I do six weeks from now?
- What can I do today?
In doing this, you may find the need for even more scrutiny of your goals, which is why the next task is to determine whether your financial goals are SMART.
If you are not familiar with the acronym, SMART comes from a 1981 article by George Doran, which is all about making sure your objectives in life are clear and reachable, and in order to do that, each goal should be:
- Specific, simple, sensible, and significant
- Measurable, meaningful, and motivational
- Achievable, agreed, and attainable
- Relevant, reasonable, realistic, resourced and results-based
- Time-bound, timely, time-based, and time-sensitive
DECU has set out before to establish the importance of SMART goals for our members, and we’re happy to share our previous DECU Daily blog post “Smart Financial Goals” at the following link.
When setting financial goals, sit down and write out a list of all of them, short-, mid-and long-term. You’ll likely end up with short-term goals within the next year, medium-term goals over the next five years, and long-term goals that go beyond a five-year window.
With these goals identified, now comes the part where you try to fit them into your monthly budget and track your efforts. Each month check to see if they fit into your life, whether you are making progress and how to adjust and stay on track to forge ahead.
The Big Picture Over the Long Haul
DECU makes it easy for members to achieve their financial goals every day, with Best-In-Market rates and a commitment to clear and understandable online education. Still, some goals stretch out into an unseen future that can seem far away and distant.
While it may seem simple to focus on your budget’s daily spending, such as choosing to cut back on pricey coffee shop lattes in favor of home-brewed java, the long span of working life means that more significant, more substantial financial goals are just as important.
But for young workers just starting, the urgency of how to pay for life after employment ends fails to trip the necessary alarm bells that spur many mid-career and even older workers to get up to speed with their individual pension plans.
DECU has its members covered with specific goals for retirement planning in another blog post from earlier in the year, and you can read more about specific strategies in full at this link.
Nevertheless, some goals to examine over the long term might include:
- How to optimize Social Security benefits?
- How much to spend in retirement?
- What are emergency strategies in case of early retirement?
- DECU’s Retirement Savings Calculator
The Future is Coming
Regardless of your choices, time still carries on. Along the way, the path is bound to be littered with setbacks and rejection in the slow and steady march to progress.
With a clear set of financial goals, DECU members can make bets on the future that reward short-term sacrifice, incentivize regular investment, and cover the costs of a life well-lived.
Whether you want to build an emergency fund, pay off debt, save for a house, a vacation, or your retirement, the most transparent path to a better future is setting financial goals and seeing them through.