Helping Create Success
The New Year is quickly approaching and so is resolution season.
With that comes a ton of new goals for the coming year. Some people will choose to focus on fitness, some will resolve to read more books, and others will focus on their finances.
Before I dive into any post about personal finances, I like to remind readers that I’m not a financial advisor, but I am a goal-getter, and I love to share the financial tips and tricks that I’m using and exploring.
The following ten financial goals are all ones that I’ve set and crushed myself in the past year or two. Not because I’m amazing – nope, not at all. I’ve crushed all of these goals because they’re all relatively easy to do, and you can achieve them all too.
For the most part, I’ve listed these financial goals in the order of difficulty or practicality, so if you want to, you can tackle them in order and one at a time.
I’ll walk you through them.
- Get a Free Credit Report
- Evaluate Your Finances and Build a Budget
- Read One Personal Finance Book (or more!)
- Ask for a Raise at Work
- Start a $1,000 Emergency Fund
- Pay Off Your Smallest Debt
- Start Saving 10% of Your Income
- Join a Matching Retirement Program
- Convert a Hobby Into a Side Hustle
- Meet with a Financial Advisor
1. Get a Free Credit Report
By far the easiest financial goal on the list, getting a free annual credit report is a must. Heck, it’s so easy, why not do it today?
For the longest time, I thought to get a free credit report damaged your credit score. It’s something I was told repeatedly in my late teens and early twenties, but it’s not true. Hard inquiries may ding your score, but soft inquiries, like creditkarma.com, do not.
What’s the difference?
U.S. News defines the difference between them for us:
A hard inquiry is an inquiry that occurs when a prospective lender checks your credit report to make a lending decision. Hard inquiries can slightly lower your credit score and will typically stay on your report for two years.
A soft inquiry is an inquiry that occurs when a person or company checks your credit report as a background check, like when you check your credit score or a mortgage lender preapproves you for a loan. Soft inquiries can occur without your permission, but don’t worry – they won’t affect your credit in any way.
So, why not sign up for a free credit report right now?
A credit report can often reveal errors that could be reducing your overall score, and many are easy to fix. If you do have things that are lowering your score that you are responsible for, freecreditreport.com also provides tips and tools for fixing those as well.
You can’t fix issues that you don’t know about, right?
If you don’t think you need a good credit score because you don’t use credit, think again. Having a poor credit score can show up on background checks for jobs and apartments, and it could raise your insurance rates.
Before you do anything else to improve your financial situation, get a free credit report at freecreditreport.com. You won’t regret it.
2. Evaluate Your Finances and Build a Budget
Now that you know your credit, the next financial goal you should set for yourself is to evaluate your financial situation and establish a budget.
Now, many people view budgets as a restriction – something that limits your freedom and sucks the fun from your life. That couldn’t be further from the truth. Budgets are, simply put, smart ways to keep track of all the money you have coming in versus going out.
If you have more going out than you have coming in, you’re getting into debt fast, and this can happen without you noticing it.
A budget allows you to see what you have coming in, but more importantly, it will enable you to track your expenses.
You may be spending more on food or entertainment than you even realize. Establishing a budget is number two on my list because you can’t effectively achieve the remaining eight financial goals without first completing this one.
The good news is that I’ve written a post and built a quick-start budget template for anyone looking to jumpstart their very first budget, or for anyone looking to get a little more detailed with their budgeting. Have fun!
3. Read One Personal Finance Book (or more!)
I’m a huge fan of reading! Books have the power to bring us the teachings and mentorship of the world’s greatest minds without ever meeting them. That’s huge!
A couple of year’s ago my father-in-law gave me two of Dave Ramsey’s books for Christmas: Dave Ramsey’s Complete Guide to Money and The Total Money Makeover. After reading those books, my views on my personal finances changed forever. I started attacking my debt, saving for retirement, and more.
Before reading those books I knew that being smart with my money was important, but I didn’t have the strategies or knowledge to be effective with my money. Those were not skills my parents or my high school taught me too much about, and if you’re in that boat too, books can help you fill that gap.
Even if you don’t like to read, I encourage you to read at least one personal finance book this year. The sooner, the better. If you truly despise reading, try listening to an audiobook on Audible while you’re driving to work, walking on the treadmill, or even cooking in the kitchen.
For new users, you can get a free, 30-day trial which will get you one free audiobook.
4. Ask for a Raise at Work
Asking for a raise at work may seem like a simple goal, after all, it’s just a conversation with your boss, right? That said, statistics show that a large percentage of people are intimidated to ask for more money.
Yes, asking for a raise can be nerve-racking, but there’s nothing wrong with asking for higher pay to match the hard work you’re doing day in and day out. If you truly believe you’re worth more than you’re making, you shouldn’t feel nervous, ashamed, or embarrassed about asking for a raise.
Your manager should know about all the hard work you’ve been putting in, but we’re all busy, and we’re quick to forget recent events, especially in fast-paced work environments.
repare a case for why you deserve a raise and highlight your top achievements and how you’ve provided value to the company. For a full guide on how to best ask for a raise, check out this article on Glassdoor.
Once you get the raise you’ve longed for, you should put it to good use, but we’ll cover that in the other financial goals ahead.
5. Start a $1,000 Emergency Fund
Okay, the first four goals were pretty easy. Now that you’re warmed up let’s tackle something a little more challenging.
If you read either one of Dave’s books above, you no doubt read about his $1,000 emergency fund. An emergency fund is crucial because it can help keep you from using credit cards in a pinch.
Dave teaches that your emergency fund should start at $1,000 because $1,000 will cover most smaller emergencies. If your car breaks down, if something in your house breaks, or even if you have a slight medical emergency, $1,000 should just about cover it.
$1,000 may seem like quite a bit of money, but most people can scrape together a $1,000 if they tighten up their budgets for a couple of months.
Ideally, you can cut out all eating out, entertainment, and any other unnecessary spending for a couple of months and save the money. The trick is to do it as fast as you can by applying as much focus to it as you can. Put every penny you can afford into savings until you hit $1,000.
Dave also teaches that this money is reserved for true emergencies. According to Dave, most people refer to Christmas shopping as an emergency and lean on credit cards to get through the holidays, but Christmas is always in December, so you should be able to plan for it. True emergencies are things we can’t plan for.
If you don’t already have a savings account, money.com has a fantastic article with many online savings account options. Online accounts are great because, while you can access your money, it does make it a little bit harder to spend your money in a moment of weakness. Give that article a read here.
Ready to start paying off some debt? Let’s take a look at goal number six.
6. Pay Off Your Smallest Debt (at least!)
Now that you have a budget, a raise, and a $1,000 emergency fund, it’s time to consider paying off some debt. Depending on how many debts you have, you may want to attempt to pay off more than one, but it’s okay to start small.
To do this, I always recommend setting up an account with undebt.it. Undebt.it allows you to list all of your debts, interest rates, monthly payments, and so on which will then let you see your overall payoff date. For many this will come as a huge shock – it certainly did for me!
It’s unfortunate, but many people continue to make their monthly payments with little thought to when they might become debt free because, for many people, debt is just “a part of life.” But it doesn’t have to be!
Using undebt.it and the Debt Snowball technique, you could start attacking your smallest debt and have that paid off in no time, depending on how big your smallest debt is. If you’re serious about improving your personal finances, check out my post on how to use the debt snowball to start paying down debt fast.
Note: If you want to keep paying off debts for the rest of the year, way to go! But if you want to keep working your way through my top 10 financial goals, keep reading. Either way, you’re finances are getting better by the minute!
7. Start Saving 10% of Your Income
Now that you have $1,000 in an emergency fund, it’s time to start getting more disciplined with saving money.
The ancient Babylonians were the first people to discover the universal laws of prosperity. In his classic bestseller, The Richest Man in Babylon, George S. Clason reveals their secrets for creating, growing, and preserving wealth.
If you read this book or listen to it on Audible, you’ll learn that the biggest secret to prosperity is saving 10% of your income first, before doing anything else. To clarify, we’re talking about 10% of your take-home pay, not your gross pay.
Get a Free, 30-day Trial of Audible and Enjoy 2 Free Books
The most common money mistake people make is that they make their expenses their top priority which rarely leaves any money to save. When we form this habit, our expenses tend to grow to meet our income.
We evaluate what we can “afford” based on 0% savings. Instead, we need to train ourselves to save 10% first and then cover our bills with what’s left over. Ask yourself, “What can I afford with 90% of my income?”
Regardless of how much money you make, set a goal to start saving 10% of your income from every check you receive.
One good way to do this is to set up an auto-deposit with your employer. Many companies can split your paycheck into multiple accounts, so be sure to ask if they can place 10% of your check into a savings account for you.
If you’re having trouble saving 10%, go back to your budget and see if you can make some cuts to make room for your savings. It will be well worth it when you’re sitting on a huge savings account.
8. Join a Matching Retirement Program
Financial goal #7 may not work for everyone because it largely depends on your employer’s benefits package.
Many companies offer some kind of matching retirement fund. For example, my company provides a Simple IRA with a 3% match. That means that if I put 3% of my salary into the fund, they will also deposit an additional 3% beyond my regular paycheck. That’s free money!
I see many people put off starting their matching plan because they feel they need that extra 3% on their paycheck, but for every pay cycle that you’re not doing this, you’re missing out on free money. I did this for over two years and missed out on a lot of free money. Boo!
If you can’t save 10% AND start your 3% matching account, try saving 7% of your check in cash and use the other 3% to start your matching fund. Although it’s not easily accessible cash like a savings account, this is technically still saving 10% of your income.
If you do that, you’ll be saving 13% with your company’s matching funds (7% savings + 3% retirement + 3% matching funds) or 16% if you save your own full 10% in a savings account.
Please don’t put this off any longer. If you haven’t already, set a goal to talk to your employer and to get this account set up as soon as possible.
Note: I’ve set this goal behind starting an emergency fund and saving 10% because I feel it’s more important to have cash savings on-hand before opening a retirement package, but please feel free to rearrange these goals to meet your own needs.
9. Convert a Hobby Into a Side Hustle
By now you’ve undoubtedly heard of a side hustle. If you haven’t, allow me to explain quickly. A side hustle is not a second job where you have a second boss and a second schedule you have to work around.
A side hustle is a passion or a hobby that you can work on in your spare time to make more money. A good friend of mine loves shopping for clothes at thrift stores and secondhand shops as a way to recycle clothing and save the environment. So, instead of just doing that as a hobby, she started offering her services as a monthly subscription box called Reclaimed Clothes Box, or RCB.. Boom! Side hustle.
Another friend of mine loves working on cars in his garage. He’s been rebuilding transmissions in his free time for years, but this year he took it to a whole new level. He started an online store where he sells transmission rebuild packages and performance parts.
Both of these friends could scale their side hustles as time and technology allow, or they could stop altogether. The point is, they have total freedom.
As you seek to turn a hobby into a side hustle, make sure it’s something you enjoy. The last thing you want is a second “job” that’s a drain on your energy.
Some other examples could include:
- freelance photography or writing
- starting an eBay, Etsy, Amazon, or Poshmark store
- creating an online course
- starting a blog
- become an Instagram influencer
- drive for Uber or Lyft (these are not part-time jobs because you’re in control of how much you work)
- sell your services on Fiverr or Upwork.
The list goes on, and on and you can find tons of great ideas by doing a quick search on Google.
10. Meet with a Financial Advisor
While this financial goal is super easy, I saved it for last because I believe investing with an advisor or exploring more complex investing ideas is something you should only do after you’ve started a solid savings plan, paid off your debts, and started your company match retirement plan.
Again, I’m not an advisor, just a guy with an opinion.
Regardless of your financial goals, meeting with an advisor is typically a good idea because you can tell them about your current financial situation and they can help you more strategically plan for the future.
Let’s say that you wanted to retire at 65 with 1 million dollars. A financial advisor could help you create a plan to make that goal a reality, or at least tell you what you would have to do to make it a reality. For example, to retire at 65 with $1 million, you would need to start saving about $405 per month at the age of 25, given an average annual return of 7%.
If you’re like me, you had no idea you would have to save that much money to hit $1 million. It blew me away!
Meeting with a financial advisor can help you assess your financial situation, and they can craft a plan to help you achieve your goals and meet with you each year to measure your progress and tweak the plan.
Best of all, the first meeting is usually free! Financial advisors are going to make their money from fees on the investments or from commissions on the products they sell, so don’t worry about paying for a consultation.
So there you go! If you’re looking for an excellent financial goal to set this year, look no further. Depending on where you are in your financial journey, you could start at the top and work your way down throughout the next year. Or, you could pick and choose based on what excites you.
Either way, the key is to start now. Don’t wait another minute.
Set a goal for yourself that gets you excited and then give it everything you’ve got.
You’ve got this!
Which financial goal are you going to set?
Please share it in the comments below. I’d love to know and I’d love the opportunity to support you in everything you’re doing in your life.
Remember, you’re only one goal away from something Awesome!