Ray’s Take: A new year for many brings with it thoughts of New Year’s resolutions. Whether it’s stopping smoking, losing weight, saving money or spending less time at work, resolutions too often feel negative or depriving. Instead of talking about “making resolutions,” we should be talking about “setting goals.”
One of the most important things you can do to set yourself up for financial success is to set financial goals each year. There are a lot of people who make lots of money but wind up broke because they did not set financial goals and manage their money accordingly along the way.
These goals should not be vague. Your goal should not be to be “rich” or to retire “someday.” It should be to retire on a specific date with a certain amount of resources. If you want a vacation home, your goal should be to buy the home at a specific location, costing a specific amount, by a specific date.
Once you create your goals, then you can start working backward to create the plan to get there.
Success is rarely a sudden event. It is a series of consistent choices. Think of small things you can do each month to help you reach your ultimate financial destination. And don’t forget to create measurable goals so that you can keep track of how you are doing and build off your success or clearly see areas that need to be reevaluated or improved upon.
Review your financial goals at least once a year. Some things that may have been important at the first of the year may not be important by the end of the year. And some goals you set in your 40s may not be important in your 60s. Your financial goals will change, so review them periodically to ensure you are on the right track.
Dana’s Take: On cold winter days, I dream of sugar-white beaches. It’s a pre-retirement fantasy of spending more long weekends in sunny places. I guess you could call that a financial goal. So, I must ask myself, “What I can do now to make those dreams a reality?”
First, I could delay replacing my car. Even though the car has passed its 10-year birthday, it works great and I could drive it for at least another year.
Second, I may be investing too much in renovations and redecorating of our Memphis home. I could free up some of that cash for a sandcastle on the beach.
Third, I can look in the trash. What am I giving away to Goodwill that I can stop buying in the first place? Target and Amazon impulse purchases will be a good starting point.
By reining in home renovations, car purchases and impulse shopping, I can already smell the sea. I’ll see you there.