Thinking of setting some personal finance goals for 2011? Set yourself up for success!
Every January people make resolutions, and by February most people have abandoned them, discouraged and disillusioned.
This could be because the resolutions are poorly framed to begin with. For instance, one could say, “In 2011, I want to lose weight!” Well, that’s a noble goal, to be sure, but it’s also a goal without a clear path for success.
A better frame for this resolution might be, “This year, I am going to exercise 4 times a week!” or, “In 2011, I will lose 5 pounds a month!” This gives an actual number to shoot for, and helps us work toward a goal.
The same can be said for developing personal finance goals. Just resolving to be more responsible with your money is not enough! You need to have some tangible goals associated with your resolution to improve your financial situation. Here’s a few ideas to get you started.
Attainable Personal Finance Goals for 2011
- Stop using credit cards – Truth is, people tend to spend more when using credit cards. The buy-now-pay-later syndrome just tricks the mind into being a little more liberal with the amount. The rewards programs may be tempting, but if you’re spending more, is it worth it?
- Raise Your Retirement Account contribution – It’s a no-brainer – adding to your retirement account is investing in your future. If you make it a priority to put more away – maybe even maxing out on your contribution for the year – your future self will thank you! This is particularly a smart idea if your employer has any sort of matching program. Maximizing your contribution means getting more free money!
- Reduce Your Debt by X% - This involves taking honest stock of your financial situation and making some tough choices. You can’t make a dent in your debt unless you find other areas of your budget to cut! Maybe this means eating out less, or cutting back on non-neccessity shopping. Find a piece of your pie, and feed that debt monster! When he finally stops roaring, you’ll be so glad you did!
- Start an Emergency Fund – I began an emergency fund in 2008 by putting away $60 a paycheck. My fund is now over $3,000, and came in very handy when I needed it for an unexpected car repair last year! Just by putting away a negligible amount each month, you’ll have a much needed cushion for the unexpected. It’s mostly painless and the rewards are immense! (And can actually help you with #1!). You might want to choose a high-yield interest account like SmartyPig to help bolster your savings.
- Pay extra toward your mortgage – Even if it’s just $50 a month, the extra money will make a big difference down the road. Or resolve to put part of your yearly bonus or tax return into one entire extra payment this year. When it comes to paying down your principle early, a little bit goes a long way! Check out this amortization calculator to see how much it will help!
- Put away X% of your income – Experts recommend putting away as much as 10% of your take home pay each pay period. If you take the deduction automatically, and look at it a a necessity, like a loan payment (to your financially savvy future self), then you won’t miss the money. Then, when you’re ready for a big ticket item like a house down payment or your dream vacation, you’ll have what you need on hand!
An important thing to keep in mind: Don’t try to change everything all at once! That’s a sure way to set yourself up for failure. You may even want to set monthly goals to give yourself a progress check.
And remember, while the New Year is a great time to take stock and resolve to make improvements, any time of year is ideal for making a promise to yourself for a better future!