As you set your 2018 resolutions, here are the top five financial goals to set this year.
1. Determine the Outcomes
Determine the outcomes you want to see in 2018 that align to your values and put a dollar estimate for what it will take to accomplish each goal. For example, if you want to become an avid explorer you may need $5K for a trip to Belize.
2. Balance the Long and the Short
Set long and short term goals for each big category. Let’s say you want to increase your net worth to $1M in 5 years – that becomes your long term goal. Your short term goal can be something like – grow your net worth by 10-25% in 2018. Do this same exercise for all major goals – whether it’s getting out of debt, saving, investing, or beyond – set a long term and short term goal.
Tip – Use the app Personal Capital to calculate your net worth.
3. Calendarize It!
Plan when you’re going to accomplish each goal. Be specific. For example – I am going to Belize June 5-19, 2018. Put a date next to each goal’s finish line. Set a date for when you’ll pay off your next credit card, when you’ll reach your savings goals or when your portfolio will reach a specific amount.
4. Budget Use a Monthly Budget
Once you’ve determined when you want to achieve an outcome, determine how much money you need to set aside each month and build that into your monthly budget. My favorite budgeting app is EveryDollar.
Tip – After you create your January budget, actually track every expense so you have a realistic picture of what you spend – and here’s the game changer – go back and adjust your budget so that your income – expenses = 0 after you’ve tracked everything. You will need to reduce some leisure categories to cover your overages in other buckets! And then do it all over again for February because every month has different needs (i.e. spring break, taxes, Valentine’s).
5. Get out of debt!
Stop paying interest on stuff you don’t have or don’t use anymore. Especially on food – that’s my pet peeve. If you charge your food on a card think about where that food is thirty days later when you’re paying interest on it – it’s in the sewer, ewww!! Stop charging and only buy what you can really afford.
Tip – It’s not worth the points! You spend 40% more when you swipe, so perform some plastic surgery and cut your favorite cards.