This year is going to be the year where your crush all your financial goals!
New Year, new you, new financial goals. You are determined to pay down debt, invest in retirement, increase cash savings and build a sufficient fund to help you mitigate emergencies.
But before you know it, life throws a curveball at you, and you are unable to catch it. All of your resolutions get thrown out of the window. You feel like a failure. You give up. And it’s only March!
The problem is not that you didn’t have enough willpower to persevere. You didn’t have a game plan.
This must change. Your financial end goal depends on you making a solid plan to chart your destination. Here are 6 practical tips on how to get to your financial resolutions this year. No more excuses!
1. Write Down Your Goals
“If you don’t know where you are going, you‘ll end up someplace else.” – Yogi Berra
If you don’t define your own financial goals, you will never be able to achieve them. No matter what your financial goals are, write them down. They can be saving for a property down payment, paying off credit card debt and etc. According to a report by Forbes, those who put their goals to paper are significantly more likely to succeed than those who do not.
Use the SMART goals model – Specific, Measurable, Attainable, Relevant, and Timely when setting your financial goals for the year. An example of a SMART goal would be something like this: “I would like to pay off my RM5000 credit card debt in three months by increasing my side income and cutting my spending.” Put your written goals where you can see them clearly and review them regularly to see how far you have accomplished.
2. Create a Financial Plan
“If You Fail to Plan, You Are Planning to Fail” — Benjamin Franklin
Once you have written down the objectives you wanted to achieve for the year, it’s time to formulate a workable plan to tackle them. A lot of the time, a financial plan revolves around a budget, and this is where most people hold back and give excuses like, “I have tried this before, and it didn’t work.”, “I don’t have the time nor the flexibility to stick to a budget.”
But with the advent of technology that allows you access to a wealth of resources at your fingertips, you no longer have an excuse to not commit to a budget. For starter, you can download free budgeting worksheets offered by many financial sites to set your budget or create a financial plan that you can follow through, which generally take about 30 minutes to 2 hours to complete, depending on your financial situation.
Other than that, there are countless budget apps that you can use to help you keep track of your spending conveniently.
3. Setting A Timeframe for Your Goals
“Once you have mastered time, you will understand how true it is that most people overestimate what they can accomplish in a year – and underestimate what they can achieve in a decade!” — Tony Robbins
Categorize each of your financial goal as short-term, mid-term, or long-term as this will help you sharpen your focus when executing your plan.
Short-term goals are those you want to accomplish within the next six-months to three years, for example, saving for an emergency fund or making a down payment on a car.
Mid-term financial goals are objectives you wish to achieve within three to five years. They could be saving for a down payment on your first house or investing in a new business venture.
Some of life’s biggest goals, like retirement and having children belong to long-term goals which are set more than seven years away.
A timeframe sets out the milestones of your financial plan and allow you to more easily identify your accomplishments along the way.
4. Monitor and Review Your Progress
“If you’re walking down the right path and you’re willing to keep walking, eventually you’ll make progress.” – Barack Obama
The beauty of making a plan and setting a timeframe is that you can monitor your progress along the way, as well as review and update your goals accordingly. You can measure your financial progress based on several criteria such as income, net worth, debt reduction, retirement savings.
At each review, you can ask yourself questions like: “Am I earning enough to meet my investments and savings objectives?”, “Am I contributing sufficiently to my retirement account?”.
If you’re working with a financial advisor, ask them how frequently you should meet to discuss your progress. If you’re doing it on your own, designate times to look at your account between now and when you need to reach your goal. It’s advisable to review your progress on a monthly basis for short-term objectives, and quarterly and annually for longer-term goals.
Avex Credit is a licensed money lender in Malaysia under the purview of the Ministry of Housing and Local Government and governed through Money Lenders Act 1951 and Money Lenders Act (Amended) 2003. We provide a variety of personal, mortgage and business loans that are tailored to meet your specific needs.
Want to pay down your credit card debt this year? Talk to our advisor to find out if you’re eligible for a loan.