Happy New Year! With a new year, comes a chance to set new goals and resolutions to achieve. The best way to achieve your desires is to set SMART goals. SMART goals are specific, measurable, attainable, realistic, and timely.
The SMART methodology can be used for any goal that you wish to set. For example, if your goal for 2017 is to lose more weight you could make that a SMART goal by saying the amount of weight you want to lose each month and what you will do to achieve the goal.
Today, we are going to focus on SMART financial goals.
Earn More Money
Who wouldn’t want to earn more money in 2017? By simply earning more money, it can allow you to achieve so many other goals. There are many ways to earn more money.
- Focus on a promotion at your full-time gig
- Grab a part time gig for your free time
- Start a side hustle (like freelance writing, driving for uber, etc…)
To turn this into a SMART financial goal, be deliberate about how much extra money you would like to make each month and how you plan to do it. Instead of just saying you want to earn more money in 2017, say you would like to earn $1000 each month through freelance writing and affiliate income. After the specific goal is set, you can work on how you will achieve that goal.
Spend Less Money
In order to turn spending less money into one of your SMART financial goals, it is time to look at your spending from the previous year. This step will be easy if you used a budgeting app like Mint.com in the previous year. Look at each of the categories of spending in your budget to determine what areas can be reduced or cut out completely. Discretionary spending like eating out and shopping are typically the two categories that are the easiest to cut.
Once you figure out what categories you are going to reduce, determine the actual amount that you can cut. Also, be realistic when setting that amount and determining if the reduction will be gradual or more sudden.
Pay Down Debt
After the holidays, paying down debt is a goal for many people like my friend MJ who paid off 39k on a teachers salary. Besides the fact that debt literally costs you money each month, it can also limit your extra income to use towards saving or traveling.
In order to turn this into a SMART financial goal, be specific about how much debt you want to and realistically can pay off each month. For example, after you have reviewed your budget, you should be able to set a realistic goal like paying off $500 of credit card debt each month. Also, take conscious steps to put any additional income towards your existing debt like your tax refund or bonus from work.
Related: 8 Strategies to Pay Off Debt Fast
Save More Money
Saving money is a large goal that can help you accomplish many other things like buying your first house, purchasing a new car or even having additional money to invest.
In order to make saving a SMART financial goal, start by taking a look at your budget. How much can you afford to save each month? Then, put that saving goal into auto drive by automatically transferring money each month to your saving account. Another option to put your saving into auto drive is to use an app like Digit which automatically saves money for you. Click here to try Digit for yourself and have $5 automatically added to your account.
Related: 4 Best Apps to Automate Saving
Save for Retirement
It is estimated that millennials will need 1.8 million dollars when they retire. Therefore, saving for retirement is essential to ensure a comfortable retirement.
Start small. If your company offers a 401k plan, find out if they match any contributions. If the company does match contributions, contribute at least up to the match. By contributing up to the match amount, you are not leaving any free money on the table. If your company doesn’t offer a 401k plan or you work as a freelancer, start a traditional or Roth IRA. In 2017, the maximum amount that can be contributed to an IRA is the lesser of 100% of compensation or $5500.
Invest in Life Insurance
Life insurance protects anyone that depends on your financially. In the event of death or terminal illness, life insurance provides money that assists with the sudden loss of income. Although life insurance is most popularly known to may for funeral expenses, it is so much more than that.
There are two main types of life insurance: term and whole life.
Many millennials think they don’t need life insurance yet or that their life insurance policy at work is sufficient. Anyone that has someone that depends on them needs life insurance. Although I currently don’t have any dependents, life insurance is much cheaper to get know than when you get older. The thing is the life insurance policy that you receive at work is typically for a fairly low amount and the coverage is only good while you’re employed by the company.
In order to make investing in life insurance, a SMART goal set a timeframe for when you want to get life insurance. I decided to invest in life insurance last year and decided to start my policy prior to my birthday.
Investing is the ultimate way to create wealth.
If you want to make investing one of your SMART financial goals, commit to investing a specific dollar amount within a specified timeframe. For example, your goal could be to invest $250 each month for the first 6 months of the year into a taxable account.
If you are looking to start investing now, try Acorns. Acorns automatically invests your spare change for you in to ETFs (exchange traded funds). Click here to try Acorns now.
Related: How to Invest with $100 or less
Travel More Often
Traveling more often is a popular goal when a new year starts.
In order to turn traveling into a SMART financial goal, set specific trips you’d like to take, the budget for each trip and the dates for each trip. Once you have outlined those three details, then you can work on regularly saving money for the trip(s).
Automating your saving is an easy way to earmark additional money for travel. There are many different ways to automate your saving. You can start by automatically transferring money from your checking to savings account each month. Another option is to use an app like Digit which automatically saves money for you. Click here to try Digit for yourself and have $5 automatically added to your account.
Related: 4 Tips to Catch a Flight Deal
Overall, it is important to spring into action to complete your 2017 goals. That means sitting down, listing your goals and figuring out the actual strategies that you will use to achieve those goals.
What are your SMART financial goals for 2017? Tell us about them in the comments!
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