Welcome to 2017! If you are like many, you have come up with some New Year’s Resolutions, or goals, for the New Year. For most, money is at the heart of these annual goals, since they involve either spending money, saving money, or paying down debt. So where should you start?
Here is a step-by-step money planning process that will give you clarity, confidence, and direction in the New Year.
1. First, grab a blank piece of paper and write at the top, “Imagine it is December 2017…” Project yourself mentally into the future and imagine looking back over 2017. As you reflect back over the previous 11 months, describe what HAS to have happened for you to be happy with your progress – personally, professionally, and financially. Just write, in free form, anything that comes to mind. This written document becomes your VISION for a successful 2017!
2. Next, come back to present time and make a list of 7-10 goals you wrote down that involve money or finances. These might include, “Increase Savings”, “Pay Down Debt” or “Purchase a New Car”. They don’t have to be completely specific yet, just get them all written down, big and small.
3. Armed with your list, now decide what your #1 is. This can be difficult since all probably seem important. What this means is, out of all of your money goals, there should be one that stands out. That one that trumps all others, and if accomplished, would make all the others easier or no longer necessary. For example, “Increase Savings” would allow you to “Purchase a New Car” faster and easier, or start a child’s college savings account, or save up for a vacation you want to take.
4. With your #1 goal now identified, choose two numbers you will measure your success or failure by. If your goals aren’t specific and measurable, you will most likely fail. That’s just how goal setting and achievement works. For example, if your #1 money goal is paying off debt, your first number to measure your success by might be: “Zero balance on the Alaska Visa”. There’s no longer any ambiguity to your goal. When 12/31/2017 arrives, you either have a zero balance or you don’t, right? Your second number, or metric used, might be: “Only $5,000 left on auto loan”. Having at least two ways to measure your progress around your top goal is key to your ability to achieve it.
5. Finally, write down two key activities or habits that you will implement to achieve the above results. This is where the rubber meets the road. New habits might be, “Pay $500 extra on the Alaska Visa each month,” or “Limiting weekly grocery budget to $200.” Both of these are action items you can control, and push you towards your goal.
We love hearing your goals and successes! Please share any goals, your progress, and any questions that come along the way as you work toward a bigger, better, safer financial future.