It’s time to set some New Year’s Resolutions! I would rather consider my “resolutions” goals, since I find it easier to put an action plan to goals. I am a firm believer that everyone should have goals, especially ones they set for themselves (rather than a spouse, employer or friend). Goals are something more substantial than ideas, dreams or wishes; goals have an action plan behind them.
Financial goals in particular require regular investments of money, time and effort over a longer period, however you need to have an achievable action plan to make them happen. I have always had a few financial related new year’s resolutions every year, so I now feel more knowledgeable about the goals that really work well to get your finances in order.
Here are 10 great financial goals everyone should have and goals that I have had in past years:
- Live below your means (i.e. spend less than you earn). Having the ability every month to spend less than your paycheck enables you to have money for saving, investing and paying off debts.
- Create an emergency fund. When you have enough savings to cover a financial emergency, it helps take away money worries. You know that you will always have a reserve should you need it to cushion the blow in the event of a sudden emergency, and it provides you with an intermediate funding so that you don’t have to dip into your long-term investments.
- Plan for early retirement. You never know when you may never be able to work again due to illness, taking care of a family member, or being laid off from a company you’ve worked 30 years for. Retirement goals may take longer than you think. Poor health or family circumstances could make early retirement a necessity. You may decide that you would like to not work so hard or even be forced into it, and it’s better to be able to retire early by your choice, than to need to retire early and not be able to. Saving early = compound interest.
- Have insurance. Ensure you strike a balance between enough coverage and cost. Health insurance, auto insurance, home owners insurance, and life insurance are important to have. If you already have insurance, make a goal to get new quotes to help reduce your overall insurance cost.
- Eliminate all the debt you can. Without debt, you are able to have full control over where your income goes, and have more money for saving and investing. Additionally, no debt makes it that much easier to quit a job you don’t like. Find ways to eliminate debt and free your mind of the worry and stress that comes with it. Dave Ramsey’s Baby Steps is a simple method of taking charge and freeing yourself of your debt.
- Create multiple income streams. Benefits: a form of income insurance, One of those income streams could be the part-time cash flow that enables you to semi-retire at an early age. If you want to start your own business – but don’t want to quit your job – starting aside business could be the way to do it, fund your retirement savings, pay off your debts, not dependent on a single source of income.
- Stop your addiction to ‘stuff’. Quote from Joshua Becker “Removing possessions begins to turn back our desire for more as we find freedom, happiness, and abundance in owning less. And removing ourselves from the all-consuming desire to own more creates opportunity for significant life change to take place.”
- Find and plan to do work you love. Work feels so much easier when you actually love what you do. I’ve
always loved finance, accounting and business and being able to do that work while also improving my finances will enable me to afford to live a life where I can do what I want through financial independence.
- Share with those that are less fortunate. Giving back can be one of the most rewarding experiences – whether you are giving time, money, or even through kindness, find something worthwhile to you to give to. Personally I enjoy supporting Junior Achievement of Arizona, the Arizona Humane Society, and Girls on the Run.
- Achieve financial independence. Reaching a point of financial independence in life has nothing to do with luck or magic. It’s simply a matter of setting good financial goals, and having a concrete plan as to how you will achieve them. After many years of pushing myself to spend less and save more, I have been able to achieve my level of financial independence. I now have the ability to easily make choices in my life and do the things that make me the happiest.
So, what are my financial goals for 2018? I want to maintain my financial independence, so I plan to stay within my spending budget, while also taking time to enjoy life and new experiences because I want to have fun and not become a hermit. I also want to focus more on my health and fitness. Both have always been really important to me, however, I rarely set goals or an action plan to be a ‘better me’ in the new year. Over the next couple of weeks, I will put together a comprehensive list of goals with an action plan for 2018.
I believe that once you have a plan established and you are working toward your goals, everything you do becomes part of your routine habits that make your life what it is. Striving to achieve financial independence can almost seem as if it’s happening on automatic pilot. You need to make it happen!