Check-In Time: How To Measure Your Progress Toward Financial Goals

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If you made any financial resolutions in January, congratulations, setting goals is an important first step in actually achieving them. You have an even greater chance of success if you wrote your financial resolutions down. A D.A. Davidson survey that looked at the financial behaviors of the different generations found that 67% of Gen Zers, 59% of millennials, 43% of Gen Xers and 37% of baby boomers created a written financial plan in 2021, and, consequently, Gen Z (58%) and millennials (50%) were more likely to have achieved all or some of their financial goals last year compared to baby boomers (34%).

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Now that we’re just about a quarter through the year, it’s a good time to check in on any financial goals you set in January — and write them down if you haven’t yet.

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“Writing down your goals helps to make them more specific and focused,” said Andrew Crowell, vice chairman of wealth management at D.A. Davidson. “Once they are written down, they can then be measured against as the year progresses.”

It’s Time To See If You’re on Track

The end of the first quarter is a great time to see how you are pacing toward any goals you set at the beginning of the year.

“Let’s say, for instance, that an individual’s goal was to save $6,000 this year toward retirement. This would break down to $500 of additional savings per month or $125 per week,” Crowell said. “Having a specific goal to measure against helps keep you honest and accountable.”

In the example above, that person should have saved $1,500 by the end of March. But what should you do if you’ve fallen behind? For starters, don’t panic and abandon your goal completely.

“Don’t fall into the trap of beating yourself up, as that same defeatist attitude will likely result in staying stuck and not moving forward,” Crowell said. “Rather, recommit to the goal that was originally set and try to review and assess how/why you got off track in the first place. Was it too ambitious of a goal? Did you fail to ‘automate’ the goal with direct deposits? Did you just procrastinate? Determining why you got off track and then taking measured steps to reengage (even if late) is the best approach.”

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See: 7 Fastest Ways To Save $20K, According To Experts

How To Account for Inflation

If you set goals in January, you had no way to predict how much inflation would increase over the first few months of the year. Due to the decreasing value of a dollar, you may want to actually increase your savings goals, if possible.

“Historically, inflation has run at a rate of around 1.5-2% per year, and that increase is generally gradual, so it isn’t as much of a shock to goal-setting as periods of higher inflation can be,” Crowell said. “Food and energy prices tend to be volatile over time, as they get impacted by everything from weather to supply disruptions, and since these are consumables that we all use every week, spikes in those prices can really make an impact on a family’s budget.”

He recommends building an “inflation escalator” into your financial goals to help to mitigate this impact.

“For example, if you had a goal of saving $20 a week for a future purchase, that amount could be adjusted mid-year by some amount to account for inflation,” Crowell said. “For illustration’s sake, let’s assume that inflation is going to be 5% for this year. That’s more than double the historical range, and if $1.00 today is only going to be worth $0.95 at year-end and we want to maintain our purchasing power, we could adjust the $20 a week to $21 partway through the year. The extra $1 is 5% of the $20, so this would help cushion the impact of rising prices and help to somewhat maintain the purchasing power of these funds.”

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Accounting for this extra cushion may mean scaling back elsewhere, and reevaluating your budget periodically throughout the year can make it easier to see where you can cut costs.

“Reviewing your budget every couple of months to evaluate how price increases are impacting things can help maintain budget discipline,” Crowell said. “Let’s say that gasoline prices have increased over the last few months such that your family is spending $20 more to do the same amount of driving. Obviously, this increase has to come from somewhere, so reviewing your budget periodically can help inform where you could spend a bit less — say entertainment or restaurant dining. It takes discipline to prioritize this budget review, but in the end, it can dramatically help you stay on track financially.”

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About the Author

Gabrielle joined GOBankingRates in 2017 and brings with her a decade of experience in the journalism industry. Before joining the team, she was a staff writer-reporter for People Magazine and People.com. Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and she has been featured on “Good Morning America” as a celebrity news expert. 

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