Latest posts by Kumiko Ehrmantraut (see all)
- Budgeting Tips for Single Parents: 7 Ways to Succeed With Your Money - January 20, 2022
We’re getting close to that time when everyone starts looking ahead to the New Year and thinking about what they want 2022 to look like. And what’s interesting is that most people’s resolutions are the same, year after year.
According to one survey, the top three resolutions are exercising more, losing weight, and saving money. And 55% of millennials listed saving money as a resolution, beating out Gen X and Baby Boomers. But that begs the question — how do you go about achieving your financial goals?
Most people don’t realize that goals and resolutions aren’t the same things and that you need different strategies to achieve each one. Let’s look at the difference between each and how you can achieve your financial goals and resolutions in 2022.
Goals vs. Resolutions: What’s the Difference?
Goals and resolutions work hand-in-hand, but they aren’t the same thing. I think of goals as a very specific target you’re trying to achieve. There’s a very definite endpoint, and you’ll know whether you’ve completed your goal or not.
In comparison, resolutions are kind of like your overarching theme for the year. There’s no specific endpoint, and you’re working toward your resolution every day. As you’re working on your New Year’s Resolution, you’ll set specific goals to keep you on track.
For instance, saving money could be your resolution for 2022, and building up a $1,000 emergency fund by July 1, 2022, could be your first goal. You’ll know whether or not you hit that goal, and working toward achieving it will keep you focused on your New Year’s Resolution.
How to Come Up With Financial Resolutions
My biggest tip for setting financial resolutions is to make them personal. Ask yourself: What’s a money problem you absolutely do not want to bring into 2022?
Many people pick resolutions they think they’re “supposed” to choose, and since they don’t really care about achieving them, they run out of steam quickly. So what is something in your financial life that you’re tired of and want to change?
For instance, if you’re sick of turning to high-interest credit cards every time an emergency happens, maybe your goal is to save up an emergency fund. Or, if you’re tired of renting and want your own place, your goal could be to buy a house in the coming year.
Another question you can ask yourself is, where do I want to be in five years? When you think about what you want long-term, this will help you make resolutions that matter to you.
The exact resolution you choose doesn’t matter, as long as it feels personal to you and it’s something you care about reaching.
How to Set and Achieve Your Financial Goals
The benefit of setting and achieving goals is that when you do it right, it sets you up to meet your New Year’s Resolutions. Every goal you set should move the needle closer to your resolution for the year. Here are a few tips to help you get started.
Set SMART Goals
When you set SMART goals, you dramatically increase your odds of achieving them. SMART goals are specific, measurable, achievable, relevant, and time-bound. Your goals should be clear and well-defined and guide where you’re going and how you’ll get there.
When a goal is measurable, that means you can measure whether you’ve been successful or not. “Paying off debt” is a vague goal that’s impossible to measure. “Pay off $5,000 in student loan debt” is a measurable goal because you’ll know when you’ve reached it.
A goal should also be achievable, which means it’s not so big that it feels overwhelming. And the goal should be relevant, which means it’s taking you in the direction you want to go in your life.
And finally, your goals should be time-bound. There should be a deadline you’re working toward. If you haven’t met your goals once you reach the deadline, it may be time to re-evaluate your plan and develop a new strategy.
Write Your Goals Down
It’s not enough to have goals floating around in your head that you think about now and then. Writing your goals down on paper makes them feel real and tangible.
I recommend writing your goals down and putting them somewhere you can see them regularly. For instance, you could write your goals on a sticky note you leave on your desk. Then every day, when you start working, you’ll be reminded of your goals.
Come Up With a Plan
Goals will not just happen on their own — you have to come up with a plan for how you’ll achieve them. Whenever I have a big project I’m trying to achieve, I like to start by brainstorming all the different steps I’ll need to take.
I recommend making each task small and easy to complete. From there, you can start assigning these tasks to your calendar and making progress toward your goal.
Review Them Throughout the Year
Once you’ve come up with your New Year’s Resolution and outlined your goals, you should review them throughout the year. It’s a good idea to schedule a time to check-in at the end of every month.
Think about what went well and what you could’ve done better. If you didn’t make any progress toward your goal, think about why that is. Was the goal too big, or did you overestimate how much time it would take to accomplish it?
The point is, there will be setbacks along the way, and you may occasionally have to adjust your plan. As long as you keep moving forward, you’re on the right track.
The Bottom Line
Goal setting has played an essential role in my life and has helped me achieve my financial goals. New Year’s Resolutions and goals go hand-in-hand, and focusing on both will help you be more successful in the coming year.
Do you have any financial goals for 2022? Let me know in the comments!
