It is tradition for many people to view the start of a new year as a time to reset their goals in life. Often called resolutions, these goals usually involve personal health and fitness, work related issues, and financial goals.
Financial goals are often hard to attain if they are not approached in the right manner. Just setting a goal to “get out of debt in 2015,” or “save for retirement” is not enough. It is important to know what to do, and what not to do, to achieve these financial goals.
Money Mistakes That Can Prevent Financial Gals From Being Reached
Creating Too Many Resolutions
Good intentions are the driving force behind making a resolution for the New Year. One tells him or herself that one is going to go to the gym and get in shape, only going to buy organic foods and cook at home, going to take a refresher course for their job, going to be more social with family and friends, and going to become financially secure in the new year. That is a lot of goals.
If they are like most people, each of those goals will also have several conditions with them. Financial security for example, will include raising credit scores, paying down debts, creating a rainy day fund, and saving for retirement. This can make it very chaotic for a person, and the end result is usually that nothing is accomplished. Fine tuning these resolutions , even if it means reducing the amount of things to accomplish, will help everyone follow through with their goals.
Tapping Savings To Pay Off Debt
It may seem like a good idea to do whatever it takes to pay off personal debts, especially after the holidays, but using your savings or rainy day fund is not a good idea. Yes, savings accounts are not earning high interest and paying off these debts would reduce the interest burden from these cards, but most people will never reestablish that rainy day fund or savings account after the debts are paid.
Subconsciously many people save money only for the intention of paying their bills if something should happen and they could not work. By using this money to pay off their debts, they no longer have that desire to have a rainy day fund because there are no more debts to cover in an emergency.
The best thing to do is make a plan to pay down these debts as quickly as possible by dedicating more money to the payments each month. Make sure to work on the cards with the highest interest rates first. In the end, the debts will be gone and the rainy day fund will be protected.
Taking Advantage Of Income Opportunities
Your current income may be enough to cover your bills each month, but having additional income is always beneficial. Look for other opportunities where you can earn more money this year. Your profession may provide you with many freelance opportunities where you can generate extra income during the year.
Look at your favorite hobby and determine if there is a way that you can generate income from what you love. Can you teach the hobby to someone else? Can you sell a finished product? Many people can turn their hobbies into additional income, giving them an extra benefit from something they already love.
You may also find that there are additional opportunities are room for advancement within your company. Make some inquiries and see if you qualify, or what you would need to qualify, for these work related income opportunities.
Additionally, consider investing your money. Extra money that you currently have, or money you generate from other opportunities, can be invested wisely and start generating additional wealth.
Realistic Goals And Timelines
It is easy to become frustrated and give up on a financial goal when immediate results are not seen. One of the best ways to ensure that resolution success is to set realistic goals. Create goals that will take the entire year to complete. This length of time helps people fell less rushed to achieve their goals and more apt to dedicate the time necessary to make them happen. This should be applied to every resolution that was made, and not just on financial goals.
Being very realistic about the goals that were set will make them easier to achieve. Mny people believe that if they do not set their goals too high they will not accomplish anything. The truth is, more can be accomplished by setting many small goals and achieving each one than by setting a goal too high and not being able to make it manifest into reality.
Remember The Human Factor
Setting goals is a very human trait, especially financial goals. However, setting too strict of goals, or not allowing for some variation, can undermine the entire process. Make sure that your financial plans are not so strict that you take away your ability to enjoy life.
Make sure that financial plans and goals have contingency plans. If an old friend flies in for the weekend, you should be able to go out to dinner and entertainment without it collapsing your entire financial plans or having to decline the invitation because you do not want to ruin your goals. Forgetting to enjoy life will make the process unbearable and the goals will not be attained.
