In addition to weight-loss and business-related goals, one of the most prevalent types of New Year’s Resolutions that people make pertain to financial goals. Whether that be saving more money, getting out of debt, or growing their investment portfolio, setting financial goals for the New Year is tantamount to health and business-related New Year’s Resolutions.
To help you make smarter choices regarding your money and to encourage you to set achievable financial goals for the New Year, today’s personal finance guide features must-read advice from mortgage professionals, investment experts, and money-management gurus.
How to Set Financial Goals for The New Year
Capital One Investing’s New Year’s Resolutions Pulse Survey of active U.S. investors show that “32% of investors will dedicate at least one of their New Year’s resolutions to personal finance, up from 27% in 2015.” More specifically, “Investors’ top goal is creating an emergency fund (24%), closely followed by investing more in retirement savings (23%) and getting smarter about investing (23%). “
Tip # 1: Set Attainable Goals
Yvette Butler, the President of Capital One Investing (headquartered in Seattle), suggests that we “Set attainable goals. Consider your long-term financial goals and discuss how you plan to reach them with your advisor. Whether accomplishing your goals requires maxing out your 401(k) or simply creating targets for your portfolio, think about starting off the new year on the right foot by taking a step back to evaluate where you stand.”
Tip # 2: Save Up To Buy A Home
James M. Molinaro, III, a 3rd generation mortgage loan officer at Woodbridge Financial in Monterey, California recommends saving more money to buy a home. “When you rent a property, you’re essentially paying someone else’s mortgage. By buying a home, you not only can be proud of owning a property, you also enjoy the added benefits of having fixed monthly payments, increasing equity in your property through appreciation, and the freedom and flexibility to renovate your home however you like. When setting financial goals for the New Year, if you dream of purchasing a home, your top goal should be to save up money toward the down payment on a home purchase. Most federally-backed loans require as little as 3.5% down, making home ownership much more attainable than many people think.”
Tip # 3: Pay Off Credit Card Debt
Andrea Woroch, a money-saving expert who shares smart spending tips and personal finance advice, recommends the following tip for paying off credit card debt. “When creating your repayment plan, determine whether the snowball method or the avalanche method of paying off debt works best for you. The snowball method focuses your funds on the smallest balances first, so you can create momentum by paying off cards. The avalanche method targets cards with the highest APR so you save more money over time.”
Tip # 4: Establish a Budget
Ash Exantus, a New York-based banking professional, financial empowerment coach for BankMobile, and author of two bestselling books on Amazon (Mind Right, Money Right: 10 Laws of Financial Freedom and What the FICO: 12 Steps to Repairing Your Credit), encourages us to establish a budget. “As the saying goes, ‘If you don’t know where you are going, then any road will get you there’. This is a simple idiom that suggests only those who are focused on their destination and plan purposefully will actually get there. Establishing a budget will put you on the right path to saving for retirement because it will give you real-time information into how much you can possibly save and what adjustments may need to be made, if any.”
Tip # 5: Automate Savings
John Jordan, a Client Segments and Priorities Executive at Bank of America, suggests that we automate savings. “You’ve probably heard the phrase ‘pay yourself first’. Make your retirement contributions automatic each month and you’ll have the opportunity to potentially grow your nest egg without having to think about it. A great first step toward automation is consolidation. If you have accounts with several banks, chances are your money can work harder and go further for you if you consolidate it within a single institution.”