As we come to the end of the year, it is a great time to determine your financial goals for the next year. Whether you desire to become debt-free, save for a large purchase, or follow your budget, it is important to evaluate your current situation before you can create your plan of action. Here are three steps to help you pave the way for sound financial goals:
- Check your credit report. The Federal Trade Commission offers excellent tips on how to receive your free annual credit report along with guidance on avoiding imposter websites and what to do if you find errors on your report. www.consumer.ftc.gov/articles/0155-free-credit-reports
- Evaluate your current budget. Are you using a budget? Is it working for you? Creating and following a budget can help you live within your means, get out of debt, and save for the future (large purchase, retirement). If you have not created your budget, a simple way to begin is to: A) Write down your income and expenses (both required and optional). B) Subtract your expenses from your income. C) Do you have funds left? This is money that can be saved or designated for a specific purpose. If you have more expenses than income, look for ways to reduce your expenses or generate more income. This can be easier said than done, but knowing exactly where you stand goes a long way in determining your next steps.
- Set realistic goals. Use the SMART process to determine Specific, Measurable, Achievable, Relevant, and Time-based financial goals. Realistic goals are those that are not too big that you give up on them or too easy that you are not challenged. Setting multiple goals at once can also be overwhelming so if you are not in the habit of setting and achieving goals, start with a single goal. Be sure to track your progress and celebrate even your smallest success!
Remember that setting goals or making resolutions is not just for January, but can be evaluated and implemented all year round. In the coming months, we will delve into these topics a bit deeper along with providing additional tips to help you meet your financial goals.