What new goals are you trying to reach in 2021?
Are you focusing on your physical health by joining a gym and cleaning up your diet? Are you throwing yourself into your career in order to earn a promotion? Or maybe, like millions of other people, you are using January’s fresh start to find renewed motivation and make a financial plan to get out of debt, save more, or reach a financial milestone, whether that’s purchasing a vacation home or retiring.
And while setting goals can be a healthy way to focus on what matters in the new year, 80% of resolutions fail by February. (1) Your finances are too important to fail, so if you have dreams of making 2021 your best financial year yet, these 5 small but impactful steps will help you jump-start your financial plan and set a firm foundation for your financial life.
1. Focus On Now
When you look back on the past, are you filled with regret at how you spent your money or neglected to save? Did you make some bad investments or take advice from the wrong source? Don’t let your past mistakes keep you from moving forward. Instead of dwelling on what you wish you could have done differently, learn from your mistakes, reflecting on what worked and what didn’t. Then take your newfound insight and wisdom and move forward. Take stock of your current financial situation, including income, savings, debt, and expenses, and decide what you want them to look like in both the short term and long term.
2. Create An Action Plan For Your Goals
Don’t be afraid to dream big financially. Do you want to save $100,000 in the next five years or fully fund your child’s college education? Having a lofty goal in mind that reflects your values can inspire you to stay on track, but you can’t stop there. Since it will take time to reach your goals and plenty of obstacles will come up along the way, set attainable objectives and celebrate your progress.
Come up with deadlines to reach specific milestones on the way toward your overall goal. If you are trying to eliminate debt, for example, determine how much you will pay each month and what your subsequent debt amount will look like in six months, one year, or five years. It’s also important to use visual reminders to keep you on track and help you avoid discouragement. Whether you use a spreadsheet or a chart hung on your fridge door, measure your progress as time goes on and remember that small steps add up to significant progress over time.
Be sure to reevaluate your goals frequently and make adjustments as needed. Having goals and an action plan to achieve your goals will give you perspective in your day-to-day decisions and help you prioritize your saving and spending.
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3. Leverage Technology To Streamline Your Life
Our lives are becoming increasingly busy, and it’s often the seemingly less important financial tasks that fall to the wayside. Thankfully, financial technology has come a long way. Take advantage of the tools available to simplify your financial life so you can devote your time and attention to the things that matter most.
Automating your bills and savings not only organizes your life but also has long-term benefits for your financial picture. Paying your bills automatically tends to improve your credit score, makes budgeting simpler, and can also make income tax preparation easier. Additionally, by automating your savings, you give yourself a chance to save before you can even touch the money.
If budgeting is your pain point, look for a budgeting platform that works for you, and don’t forget to talk to your financial professional to find out if they offer software that allows you to see all your accounts in one place so you can stay organized and track your progress toward your goals.
4. Mitigate Risks
No matter how hard you work to create a foolproof financial plan, there will always be risks and roadblocks that have the potential to get you off course. Inflation will decrease your purchasing power and rising healthcare costs can eat away at your nest egg. Unexpected early retirement could change the time frame of your goals, tax changes could throw a wrench into your planning, and the loss of a spouse could impact your standard of living. Speak with your advisor to find ways to protect yourself against these risks.
5. Partner With A Financial Professional
Whatever your situation, whatever your goals, a financial professional can walk you through each of these steps to get your financial plan in shape. You’re much more likely to make your New Year’s resolution a reality if you have a concrete plan in place. At Baobab Wealth Management, we believe that a strong planning process can give you a workable financial plan you can execute with confidence. If you want our help to create a customized, detailed blueprint of what you need to do in order to meet your goals, schedule a free introductory meeting by calling 907-317-8454 or emailing firstname.lastname@example.org.