The first of the year comes around like clockwork, and many of us either sit down with pen and paper, or finger and tablet, or even an open mind and a good memory to set resolutions - or goals- for the upcoming year. While some of these goals have to do with health, family, education or employment, some of them are bound to be tied to your finances.
Setting Financial Goals
What are some good, solid financial goals or resolutions you can set for the upcoming year? We’re glad you asked! Your goals may depend on whether you own a home, wish to purchase a home, or perhaps even purchase investment or vacation homes, but many of the most basic things we can do for our financial health are skipped over by even the most goal-minded folks out there.
4 Tips to Setting Financial Goals
Watch your credit report. It’s imperative that you keep an eye on your credit report with focused regularity. Ideally, you’ll look over your report no fewer than quarterly to ensure that it’s accurate and that you know where you stand. For those looking to purchase or refinance a home in the coming year the frequency should be closer to every 4-6 weeks. You can get free credit reports for review at www.freecreditreport.com as well as many credit card companies. You might consider getting identity theft protection as well, such as LifeLock - who helps untangle the mess if your information is breached.
Create, keep, and track a monthly budget. Having knowledge of where your money goes can help identify areas where improvement and savings can be made. If you’re saving for a big purchase this can mean the difference of buying that home in the first quarter - or the fourth. Writing the budget down on paper (or on a spreadsheet) helps put things into perspective very quickly, and is the easiest way to spot areas to attack.
Fast-track debt repayment. Using the “snowball method” made popular by Dave Ramsey, you can pay debt off much more quickly if you pay minimum payments on all but one debt (usually the smallest balance), then start pushing that extra cash as you pay off debts towards the other payments - one at a time. You’ll be surprised how quickly the snowball grows!
Turn to automation to keep on track. If you’re looking to save more for retirement, or pay off debt, or grow savings for a down payment, utilize your bank’s automation services. You can earmark specific sums to go into specific accounts on a set day every month. If you do this ON pay day, it’s likely you won’t feel the pinch nearly as much as if you “have the money, then lose it” to the accounts later.
Setting - and keeping - financial goals isn’t necessarily the “fun” part of the new year, but finding just a few things to focus on with your home finances can put you in a better spot much faster than you’d think, and open doors of opportunity previously unavailable because you didn’t have your credit, debt, and savings under control.