January is often seen as a time for a fresh start. People make their resolutions and set goals. At Pearl Planning we love setting goals, and more importantly helping people ACHIEVE them! Here are some tips for setting and achieving your financial goals in 2021.
Start with the Foundation - Get organized and find out how you are doing. Ignorance is not bliss when it comes to your finances. Knowing what you have and where you have it is key to getting your finances in order.
Cash Flows - There are several tools that can help you sort out cash flows. It doesn’t matter if you use an app, excel spreadsheet or a sheet of notebook paper. Seeing where you are can help you evaluate debt, cut unnecessary expenses, and find ways to boost savings.
Net Worth - Once you have an adequate emergency reserve you can focus on building your net worth. This can be accomplished by paying off debt or increasing savings/investments.
Investments - As your net worth increases, it becomes more and more important to understand your investments. Take some time to learn what your risk tolerance is, how your accounts are managed and when rebalancing occurs.
Values Based – You may want your portfolio to reflect your values by using ESG (Environmental, Social & Governance) investments. Or maybe you want to leave a family legacy or pass down financial education to your kids/grandkids.
Make it SMART
S - Specific: What do you want to do?
M - Measurable: How will you know when you’ve reached it?
A - Achievable: Is it in your power to accomplish it?
R - Realistic: Can you realistically achieve it?
T - Timeline: When exactly do you want to accomplish it?
Strategies that Help
Incremental over Extreme - You wouldn’t go run a marathon before you tackled the mile. Like health and fitness goals, financial goals require some training. Make gradual changes that you are more likely to stick to. Give yourself time to build up that emergency fund or try increasing your 401k contribution by 1-2%.
Now, Soon, Later - If you have a laundry list of financial goals, break them up into ‘Now’, ‘Soon’ and ‘Later’. It can be overwhelming and focusing on the ‘Now’ goals can help you avoid burnout.
Accountability Partner - Find your Financial BFF. This is someone you can share your goals, fears, and roadblocks with. This can be a partner, close friend, or family member.
Action over Ideation - Having goals is great, but how do you actually achieve them? Make a list of the steps you need to take and have a plan of action to complete them.
Professional Guidance - Use professionals where you need them and don’t be afraid to ask for help. Financial professionals can help calm the chaos, be another accountability partner and often have strategies to help you reach your goals.
Now you’re ready to make 2021 your best year yet! Check out 52 Pearls: Your 2021 Financial Action Plan for help tackling your financial fears and making monthly improvements to your financial decisions and money mindset.
Alexa Kane, CFP®, CDFA® is a financial advisor at Pearl Planning. Reach out for a call today at 734.274.6744.
8031 Main St. Suite 302 Dexter, MI 48130