As the clock struck midnight ringing in the New Year, many people had money on their minds. According to the Statista Global Consumer Survey, 39% of people said their New Year’s resolutions for 2023 were “to save more money.” It was the fourth most common resolution behind exercising more, eating healthier and losing weight.
Unfortunately, as with most resolutions, the goal to save more money falls by the wayside before midyear. Whether you are thinking about retirement or simply hoping to have a healthy rainy day fund, there are ways to set realistic financial goals that will leave you with a nice chunk of change by this time next year.
Read on for a quick step-by-step on how you can set and achieve realistic financial resolutions in 2023.
Write Them Down
First, you need to write down what you hope to accomplish by the end of the year. Writing it down makes it more tangible and may help hold you accountable. It also can help you visualize your goal and make a plan to execute it.
It is important not to be overly broad in what you hope to achieve. After all, if your goal is to fund your retirement but you are just getting started, you likely will not be able to save enough by the end of 2023.
It is great to have a big picture in mind — even a five-year, 10-year and 20-year financial plan — but you also need to set smaller, more realistic goals that you can smash this year.
Make Sure They Are SMART
If you have ever researched how to set and achieve goals, you likely have come across the acronym SMART. It is a goal-setting system generally attributed to George T. Doran, Arthur Miller and James Cunningham, who published the concept in a paper about writing management goals in 1981.
The concept of SMART is that goals must be:
- Timely (time-bound)
Applying these five principles to your financial goals for 2023 can help ensure that you clarify what you hope to achieve and reach the goals you set.
Measure Your Success
A key part of the SMART technique is the ability to measure your success. Without milestones, you will have no idea whether you are on the right track. If your goal is to pay off your credit card that has $10,000 on it, you need to put pen to paper to determine how to make it happen and what you should be doing each month in order to succeed.
Paying the minimum amount on a credit card will not help you pay it off. The first thing you will need to do is determine how much disposable income you have that you can apply toward your debt. You can do this by setting a budget. Figure out your monthly net pay then deduct necessary expenses such as housing, transportation, utilities and groceries. What is left over is your disposable income.
Most studies agree that denying yourself completely will only backfire, so successful budgets (and diets for that matter) have wriggle room. Saying you will never eat out or will not spend any money on something you enjoy may not be realistic. Allow some money for stuff you want and apply the rest toward your goal.
Review and Restructure as Needed
Finally, we aren’t all financial geniuses. The goals you set in January may not be realistic come May because life happens. Maybe good fortune has hit and you got a promotion or maybe it has been a tough year and you had unexpected costs. Regardless of what life has thrown at you, it is a good idea to review your goals and restructure them if needed.
You may find that you are not saving as much as you needed each paycheck in order to hit the quarterly milestones that you hoped to or maybe you will see that you can set a bigger goal because you will hit your previous one before July. Either way, sitting down and taking inventory will help you stay on track toward the financial resolutions that you hope to achieve in 2023.
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