The way to Create and Customise Your 2021 Monetary Objectives

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Many people see the turn of the year as an opportunity for a new beginning. It’s an opportunity to close the door on a year that may not have gone the way we wanted (and for most of us 2020 certainly fits in the bill), but it’s also a chance of a New Year ahead of us to have.

This sense of opportunity is often expressed in terms of an annual goal or a New Year’s resolution. They’re often personal improvement goals that are met with the best of intentions, but then the wheels will fall off them in a month or two.

Why is this happening? Often it is because the goal was not chosen well or that it was not really optimized for your life situation. Here are some general financial goals people can choose, as well as some strategies on how they can be tweaked and personalized just for you.

6 common financial goals for 2021

Create a budget

A budget is simply a way of dividing your income into different pools for different types of expenses so that you make sure you have enough for each area where you spend money like food, rent, clothing, and supplies. Creating a budget and then perfecting it is a powerful way to get in touch with all of your money.

Stick to a budget

Creating a budget is only half the battle. It’s actually also a challenge to hold on to it. It involves some willpower as well as some problem solving skills in figuring out why your budget is not working and how to fix it. This goal is also about making better decisions in the heat of the moment as you want to master your ability to actually stick to your budget even after optimizing.

repaying debts; to repay debts

Many people choose to get rid of some (or all) of their debt in the coming year so that they can stop paying interest payments to banks and keep that money to themselves. The first step in this process is creating a debt settlement plan. Automating this plan is an essential part of making sure it is successful year round.

[ More: Use Automatic Payments to Keep Your Finances on Track ]

Contribution to a retirement plan

The decision to contribute (or more) to your company retirement plan or your individual retirement plan is a powerful goal that will prepare you for long-term success.

Create a long-term financial plan

What are your lifelong goals and how do your finances play a role in them? Most of us have a loose collection of thoughts on these things, but translating these ideas into an actionable financial plan is an important additional step, especially when you start acting on that plan. This takes a lot of thought and planning to develop well as our lives sometimes go in unexpected directions. However, if you create a smart financial plan that adapts to your life, it will keep working for you no matter what.

[ Next: The Ultimate Retirement Guide ]

Set up an emergency fund

Most Americans simply don’t have an emergency fund, which is a pool of money reserved for unexpected events. According to CNBC, only 41% of Americans can cover a $ 1,000 emergency with savings, which means most Americans are only one problem away from falling into debt or suffering from financial disasters. The solution is an emergency fund. It’s surprisingly easy to set up your own emergency fund that will grow automatically, creating peace of mind and a resource to fall back on when things don’t go as planned.

How to personalize your financial goals for 2021

These goals sound great, but how do you make sure they don’t fall apart by February? The key is to develop a personalized goal that is designed for success from the start, and to make sure that your goal is optimized for the long term and your financial goal is practical. Develop a personal financial goal for SMART – specific, measurable, actionable, realistic and limited in time. Here’s how to make a vague personal financial goal SMART.

Think about what is realistic in your current situation

Is your goal something that you can realistically achieve in your current situation? Many people develop a goal that is completely unrealistic and far beyond the limits of what they can actually achieve, and prepare for failure. Set an achievable goal as you take small, positive, and consistent steps throughout the year. Avoid goals that require radical life changes, especially those that require continuous effort or willpower or thought to maintain.

Give the goal a specific timeframe and outcome

Include what exactly you want to achieve and when you want to achieve it. Give yourself an end date and identify exactly what you will have done by that date. For example, building an emergency fund is a primary goal, but it doesn’t specify exactly what it means or when you want to achieve it. Instead, say, “I’m going to have an emergency fund by the end of the week and a healthy emergency fund by the end of the year.”

[ Read: The Best High-Yield Savings Accounts ]

Make the outcome as much as possible based on your actions

It is a good idea to focus the goal on your efforts, not on results that may not be completely under your control. For example, if you have a savings goal, focus more on the changes you want to make than actual financial performance so that if an emergency occurs or something changes, your goal doesn’t fall apart. Instead of “I will have a healthy emergency fund by the end of the year,” which may or may not happen depending on your life, choose the goal of “I will put money aside for my emergency fund every week” focused on your efforts.

Make sure the result is measurable

It should be obvious whether or not you accomplished your goal, and the easiest way to do it is to give yourself a numerical goal. As mentioned above, this goal should be based on your efforts rather than the overall result. For example, you might have a goal, “I’m going to set aside money for an emergency 50 out of 52 weeks this year,” that is focused on your efforts and is very measurable. The goal is to easily achieve this number through automation.

Identify specific, actionable steps you can take

One final thing to consider in your goal is to think about the specific actions you are going to take to achieve that goal. What exactly are you going to be doing differently each day or week to achieve what you are not currently doing? For example, with the above goal of the emergency fund, you pull money into this savings account every week. This is your weekly promotion. If you want to automate this, setting up an automatic broadcast is another action you can take on your goal. Think of your goal entirely in terms of your specific actions that you are taking and focus your goal on those rather than the big outcome.

Too long, not read?

There are many great personal financial goals, like saving for an emergency fund, creating a budget and sticking to it, creating a financial plan, and saving for retirement, but these goals are often difficult to stick to. You can simplify it by using the SMART strategy to create goals that are tailored to your life. The goals are specific, measurable, implementable, realistic and limited in time. As much as possible, focus the goal on your efforts and actions, rather than on things beyond your control, and make it clear what you should be doing each day or week to achieve that goal. This way, the path to success is less likely to be interrupted by unexpected events.

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