Are You on Track to Reach Your Financial Goals?
Many people set financial goals at the beginning of each year. A new year feels like a fresh start, and it’s a great time to get honest with yourself about your finances. But have you checked in on those goals lately? October is Financial Planning Month. It’s hard to believe that we’re already more than halfway through 2021, and those goals you set in January may feel like a lost cause. In fact, you may even dread revisiting them and think it would be better to just start fresh next year. However, there is no time like the present to reevaluate your financial goals and set new ones. By creating goals that motivate you and outlining strategies to reach those goals, you can enter January with forward momentum that will make 2022 your most financially healthy year yet.
Setting Financial Goals
Setting financial goals is about documenting a list of achievable milestones to improve your financial situation. Goals should not make you feel guilty or deprived. Instead, they should be exciting and motivating so that you’ll take the necessary steps to reach them. When setting financial goals, try to put your emotions and financial history aside and think of money as a tool. How can you use that tool to improve your life?
Your goals will depend on where you are in your financial journey. If you are new to setting financial goals, objectives such as setting aside an emergency fund and maximizing your employer’s 401k contribution match are a great place to start. As you begin feeling more comfortable and confident, you can start to focus on investment goals and create more aggressive savings goals. One thing is clear – if you start making financial health a priority today, your future self will thank you.
Saving without any goals can quickly become discouraging. Setting a tangible purchase goal may be the easiest to pursue. For example, maybe your goal is to start investing so you can grow an account that will pay for your daughter’s wedding in the future. Or perhaps you want to take a certain vacation when you retire. Your goals shouldn’t all be purchase-related, but those kinds of “fun” goals can make it easier to get the savings started.
Being honest with yourself is key. Initially, you may think that having a new car tomorrow would improve your life, but you need to think long-term. Fun financial goals like saving up for a new car are important, but you also need goals that will improve your financial wellbeing for the rest of your life. This includes things like setting a retirement goal and increasing your 401k contribution, putting money aside for healthcare costs, and investing a portion of your income now for retirement.
Financial goals should evolve regularly. As you reevaluate your goals in October, you may realize that you haven’t set aside enough money for the holiday gifting season. Maybe you had a month with higher spending that you want to counteract the following month, or you recently got a raise at work. These are all examples of how you may need to pivot to achieve your financial goals. By evaluating your goals regularly, you can catch yourself getting off track before it’s too late.
You may find that some of your goals were unrealistic. For example, saving 50% of your income when your living expenses make up 40% is too aggressive for most people. Again, being honest with yourself is important. If you know you’re overspending on things that don’t add value to your life, now is a great time to evaluate your priorities and see how those correlate to your financial goals.
Are you putting your financial goals first? If you wait until the end of the month to set aside savings or invest some funds, you may find that there isn’t money left when the time comes. By taking savings out of your checking account as soon as you get paid (or even routing them to a different account entirely), you can avoid the temptation to spend that money. Talk to your bank about how this process can be automated each time you get paid, so you don’t even have to think about it.
There may be ways to reduce your monthly expenses, such as canceling memberships you aren’t using or dining out less. You may be surprised when you evaluate your spending that you went shopping five times last month, or that the gym you haven’t visited in years is still billing you. Checking in on your spending and saving regularly will prevent you from mindlessly paying for things you don’t use.
Remember, if you fell off the wagon, the most important thing is just to get back on track as quickly as you can. Beating yourself up or considering it a “lost cause” is not helpful and can do significant damage to your financial health progress. Money can cause a lot of shame and guilt, but it’s simply a vehicle to accomplishing your goals in life. Whether that’s buying a house or paying your child’s tuition, educating yourself and building strong financial habits unlocks many doors. Rather than feeling sad about past mistakes or the time lost, consider today as “Day One” of your financial journey and start taking your goals seriously.
You don’t have to wait until the new year to “restart” your financial goals. October is Financial Planning Month, and it’s a great opportunity to reevaluate your goals and progress. If you’re having trouble staying motivated, try to put aside emotions and think of money as a tool and consider the ways it can improve your life long-term. Don’t forget to prioritize spending by evaluating your spending habits each month. Remember, it’s never too late (or too early) to start building healthy financial habits and building the life of your dreams.
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Insight Wealth Strategies, LLC (IWS) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.