This article appears for archival purposes. Any events, programs and/or initiatives mentioned may no longer be applicable.
Five Steps to Set Financial Goals for 2022
Now that the New Year has started and you have done your best to stick to your holiday budget, it’s time to focus on remaining in control of your finances. Your financial plan is a living document that must be re-evaluated and revised continually and New Year is always a good time to do so.
1. Assess your finances. Start by re-evaluating your current situation – look at your balance sheet (your list of money coming in - what you own vs. money going out - what you owe), and add or eliminate expenses. Some services went up in price, such as gas and groceries. Some went down, such as car insurance. Make sure you adjust the amount to reflect an accurate expense. Cancel unnecessary subscriptions or ask for a better plan. Are you paying yourself first? Note: If you do not have a balance sheet, create one. You can download a template from Microsoft Word and customize it for yourself.
2. Start with an end goal in mind. What do you want to accomplish by year end? A good approach is to create a SMART goal - that’s an acronym for Specific, Measurable, Attainable, Relevant and Time-bound. Do not forget about the difference between short- and long-term goals. Some goals take time to achieve and seem to be overwhelming. Create a special place on your balance sheet by itemizing your goal and sock away a set amount every month to save towards that goal. For example, if you want to save $5000 for a down payment on a car, note $5000 on your sheet and document the $250 you put away each paycheck. This way you will see the progress and the finish line.
3. Stay disciplined and be creative. Now that you have set your goals, look at alternative strategies to achieve them. For example, my family and I set a six-day menu plan that includes snacks. And from there, I prepare my grocery list for the week. This way, I’m less prone to make impulse purchases, I’ll have all we need for meal prep (including any extra snacks for school or work), and will be less tempted to use vending machines or eat out. You know your situation the best so only you will know what strategies will work for you. Cutting costs is not always a solution. At times you might need to increase your income by picking up a small job like tutoring or being an Uber driver.
4. Put your plan in action. Now that you have set your goal and selected strategies to achieve them, start implementing your plan. As goal-setting expert Brian Tracy said, be firm on the goal but be flexible on how you get there. This article will also give you a couple ideas.
5. Adjust as needed. If something does not work, remember that you can always re-evaluate it. It is your financial plan. Take time to re-evaluate and revise as needed.
Dr. Lily Davidov is faculty chair for the Accounting, Small Business, and Insurance Studies Department at Rio Salado College. She can be reached at accounting.lead@riosalado.edu.