The holiday leftovers are gone, pants are a little bit tighter and there’s a whole calendar of possibilities on the horizon.
Setting goals for the New Year and then achieving them, however, are two very different things. Whether it’s paying down debt, buying a new house or a new car, starting or expanding a family, losing weight, taking a vacation or building up savings, the best place to start is with a plan.
“The majority of people have goals in their mind, but that’s about as far as they go,” said Clint Haynes, a certified financial planner and founder of NextGen Wealth in Lee’s Summit, Missouri.
“They kind of know what they want to do, but they never actually take the time to create some kind of a plan.”
Make a Plan
Starting that plan, Haynes said, is simple.
“You’ve got to just write the goal down,” Haynes said. “You’re actually going to be much more likely to accomplish it.”
Then it’s time to drill down and figure out how to get it done. That means calculating how much you need to save out of each paycheck over a certain amount of time, whether it’s taking a year to save $10,000 for a vacation or two years to build up a $50,000 down payment for a house.
The more specific with your goals, the more likely you will be to make them come true, said Julie Ford, a Certified Financial Planner in New York City, and founder of Ford Financial Solutions. She advises her clients to set goals that are measurable, achievable, and have an end in sight.
Strategize Your Efforts
If the goal is to pay off a $5,000 credit card debt in the next 12 months, make a plan to increase your monthly payments to $420 per month (and don’t add to the balance). Alternatively, you can refinance your credit card debt and select a payment plan that you can stick with.
Then look at the rest of your budget, she said, to find that extra money. Making coffee at home could save as much as $100 per month as does limiting eating out from four times a month to twice a month or cutting cable and relying on streaming services.
Read more: How I Paid Off $54,000 in Debt
Finally, turn your attention to developing better money habits: avoiding more credit card debt, living below your means instead of above it, building up cash reserves for emergencies and being aware of exactly how much you are spending.
“Achievement lies at the intersection of goals and habits.”
“Achievement lies at the intersection of goals and habits,” Ford said. “For example, if your goal is to run a marathon in under four hours, all the willpower and positive thinking in the world won’t get you there, but the right training habits will.”
You should also be making your money work for you.
“One of the major goals I gave each of my clients is setting up an automated savings plan into a high-interest savings account designated for shorter-term goals such as a vacation or building up a rainy day fund,” said Helen Ngo, a certified financial planner and founder of Capital Benchmark Partners, LLC in Atlanta.
“We are so used to automatically contributing to a 401(k) through work, but for some reason, people can’t seem to wrap their heads around setting up the same process for their personal goals that are not retirement related,” Ngo said.
Ngo has a client wanting to save for a trip to Thailand in November. She helped her client set up a high-interest savings account that’s earning more than 1.3%, with automatic contributions going in each month.
“Treat your personal savings as though it’s a bill you have to pay each month,” she said. “It’s a bill to your future self.”
Use the Buddy System
No matter how big the goal is or how daunting it may seem to reach it, don’t go it alone. Sharing your goals and your timeline with a friend, a spouse, a family member, or a financial advisor creates accountability, giving you additional motivation and encouragement to stay on your path even months later.
“Financial planners are here to help clients realize their financial and personal goals. We’re not there to tell clients what their goals are or should be, but rather help clients realize those goals, said Ryan Mohr, a certified financial planner in Tigard, Oregon, and principal and founder of Clarity Capital Management. “By being an accountability partner, we can help clients get back on track if they’ve veered off course from their initial destination.”
You can also find accountability by looking no farther than your phone. Apps like Digit, Acorns, and Mint all help you budget, track and save.
Smart money habits can go a lot farther than meeting that initial goal, according to the financial planners. They can set you up for a lifetime of success.
“Money touches most of our life goals, even goals that aren’t explicitly financial, such as spending more time with your significant other, which may require money for dates or vacation,” Ford said. “Healthy money habits can facilitate these goals as well as help you progress toward financial freedom.”