MONEY matters

Mark Zaifman's thoughts on money, global economic trends and politics

The Power of Setting Financial Goals for the New Year

Mark Zaifman   |    Thu, Dec 14, 2017 @ 03:15 PM

p boogie board2.jpgThink about the last time you set a challenging goal for yourself. Maybe your goal was getting to a certain weight. Maybe it was acquiring a higher paying job. Whatever your goal was, there’s a good chance you set your goals at the start of a new year. So here we are again, with 2018 around the corner.

Below are my top five categories for setting your financial goals for 2018:

  • Income goal
  • Savings goal
  • Spending goal
  • Enough goal
  • Accountability goal

First, your income goal - that’s the big kahuna. Here’s where you set your goal for the amount of income you plan to earn in 2018. If you’re self-employed, this is a bit more challenging, yet it will also help you focus on how to make it happen. If you’re on a salary, perhaps your goal will motivate and inspire you to seek a raise.

Second, your savings goal - this of course, is the other big kahuna. It’s placed as number two purposely before your spending goal. Your success in accomplishing this goal, year after year after year, determines when you’ll be financially independent. That’s why it’s so important and that’s why it needs to be at the core of your holistic financial plan.

Third, your spending goal - my recommendation would be to separate your spending into fixed and discretionary. Fixed expenses, such as your mortgage, property taxes, auto loans, etc. go into this category. Discretionary expenses, such as entertainment, travel, dining out, etc. into this category. Be realistic when setting your discretionary spending goal by leaving yourself some wiggle room.

Fourth, your enough goal - how much is enough to reach financial independence? This enough number is the amount you want to have saved by the time you stop working for money. Enough to safely and securely meet your retirement income needs. Enough to cover unintended expenses or stock market setbacks. And perhaps enough to live large, if you so desire, without the risk of running out of money later in life.

Fifth, your accountability goal - this is your commitment to yourself to always be honest with yourself about your money. The goals you set are meant to motivate and inspire and help you always do your best. Setting goals is Step One. Step Two is holding yourself accountable to your goals. That’s why you’ll want to measure actual results to the goals you set. If you fall short, give it your best shot next year and see if your goal needs to be adjusted lower or higher.

Bottom line: Recognize that setting realistic financial goals is being smart with your money and your life. It may feel awkward at first, but once you get in the habit of setting yearly financial goals AND holding yourself accountable to your goals, you’ll feel powerful.

So think of the last time you set a goal, worked hard to attain the goal and made it happen. Remember that feeling of personal victory and the jolt of self-confidence and self-esteem you felt? That’s power.

Each time you meet or exceed your financial goals, you increase your confidence that much more and literally feel empowered. Money soon becomes your servant, no longer your master. With your increased self-confidence around your relationship with money, reaching financial independence sooner than you imagined becomes your new reality.