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Personal Finance: Creating a Money Goal for the New Year

As we ring in the New Year, we’ve got fresh starts on our minds. It’s the time of year we tend to refocus after a season of “sure why not” and “I’ll worry about that next year.” And it’s the perfect time to get re-energized and turn your money goals into reality. Do it now. The sooner you start, the sooner you’ll be celebrating!

1. Write Your Dreams

What was your top money goal last year? Did you reach it? If yes, think about how you can build on that goal. If not, sit down (with your spouse or partner if you can) and create a new, specific goal for next year, like contributing an extra $2,000 to your 401(k).

While you’re dreaming, write down some long-term money goals as well. What does life look like for you in five, 10, and 20 years? Will you be vacationing on a beach? Remodeling your ’80s kitchen? Giving outrageously to the charity of your choice?

Dreams aren’t always easy to nail down. That’s why it’s so important to write them out and revisit them often.

2. Follow the Plan

How many times have you started saving for one of your dreams—a big vacation or a down payment—only to be derailed by an unexpected surgery or car repair? It happens.

By breaking up your goals into smaller steps, you’ll be able to achieve your big money goals while successfully managing your day-to-day budget. Consider it your step-by-step guide to financial success. By following the plan, you’ll create goals that will help determine priority in your budget each month. Here’s how:

  • Step 1: $1,000 starter emergency fund in the bank
  • Step 2: Pay off or consolidate debts smallest to largest with the debt snowball
  • Step 3: Fully funded emergency fund of three to six months of expenses
  • Step 4: Invest 15% of pretax income into retirement
  • Step 5: Invest for kids’ college savings
  • Step 6: Pay off the house
  • Step 7: Build wealth and give a bunch away

Each one of these steps is an important mile marker on the way to meeting your goals.

3. Re-evaluate Your Goals

After you’ve determined your dreams, line them up with the current step you’re on. For example, if you’re currently on Step 2 (paying off debt) and your year-end goal is to save more for retirement, take a few steps back.

A more realistic short-term goal would be to pay off the remainder of your student loan. That’s something you can achieve by the end of 2022 and see serious results. Small wins along the way will motivate you to accomplish your longer-term goals.

4. Budget Your Money to Achieve Your Goals

Up to this point, you’ve been laying the groundwork for success. Now comes the fun part: budgeting. A budget is just telling your money where to go each month. It’s not complicated or scary. It exists to make your life—and your goals—even clearer.

Want your money to go toward paying off that student loan? Great. Simply budget more money for it. Want to finally take that European vacation? Awesome. Challenge yourself to put away an amount each month for a starter savings fund.

Do that every month, and you’ll be celebrating by year’s end. Don’t put your dreams on hold any longer. Start your personal countdown today!

The new year and your new monthly budget give you two things: a clean slate and a chance to do something awesome—like achieve your goals! Grab hold of the next year and do great things with it, one month at a time!

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