How to Set Financial Goals
It’s January 2022! A new year and a time for new beginnings! Did you consider setting goals for 2022? Goals like eating healthier, drinking less alcohol (or better yet, trying an alcohol-free month) being more mindful and present, exercising more? Now the tough one - what about finances? For many people one of the biggest struggles going into each new year is the aftermath of overspending during the holiday season. Unfortunately, financial pressures can cause stress, anxiety and relationship issues.
Our finances can be something that sets off a variety of emotions, but one that might surprise you is that of depression. When you are struggling financially it can become a piece of your identity. And then you add on the fact that we don’t normally go around telling people that we’re struggling financially, and you have a setting for allowing sadness, stress and anxiety about your finances to lead you into depression.
If you have set the goal to be more mindful of your spending or if you have started to notice that your finances are affecting your mental health and you just haven’t had the time to consider how to make a difference, we want to help you navigate this area of your life, and set some realistic goals for the coming year.
Now what? Good question! January is the perfect month to hit the reset button and spend less. Financial goals are easy to set such as spend less, save more, reduce debt or stick to a budget. It’s not the setting the goal that is hard, it’s the sticking to it and making it a priority that is the HARD part.
So how do you make a particular financial goal, attainable and manageable? Keep reading!
Set a goal that is reasonable and specific:
Coming out of the holidays with your finances being in the red (aka debt) is a terrible feeling and is an issue that can not be ignored. So, if paying off debt is a goal, be specific – how much debt would you like to pay off in the next 6 months? Set that amount and then be reasonable! What I mean by reasonable is this:
Paying off $20,000 of debt on a salary of $51,000 in three months is not reasonable nor attainable and can feel very overwhelming. Paying off $2-3,000 over the coming year can be more realistic depending on your personal situation. For example, do you pick up a large Starbucks Caramel Macchiato on a daily basis or a large coffee? I do believe they range in price from $4.50-5.00 so if I were to do the math you could pay off anywhere from 20 – 25 dollars a week that’s ONE HUNDRED dollars a month and $1200 a year! Imagine if you were to get take-out only once a week versus twice? You would also be supporting a healthier lifestyle – two in one! Or what if you used a refillable water bottle as opposed to buying a bottle of water? That would be $5-6 a week, $20 a month and $240 a year– these are all little ways to help you diminish/reduce your debt and help relieve those feelings of financial anxiety you may be having. Only you know what you overspend on and can make this change!
Know your budget and what you can and cannot afford:
Do you have a budget? A budget is a mapped-out income and spending plan. The process can help you to concentrate on your financial goals. How?
First you need to write down your monthly take home income
Subtract your fixed expenses (mortgage, car payments, etc . – these are the ones that don’t change)
Then subtract the rest of your bills and other important expenses you may have such as gas, insurance, groceries
What remains is the total disposable income – and this number is the number you have to work with.
Now, take a deep breath and don’t panic! Unfortunately for many families, this number can be very low and stressful. If this is something you are experiencing after you work your budget, look at ways you may be able to increase your income – such as working one shift at a local coffee shop or spending less on things you don’t really need. Consider not paying for Netflix for 6 months or changing cable/cell phone companies for a lesser monthly rate. What do your banking fees look like? Is it time to consider changing banks? What are your insurance rates – many people don’t think about these fees and shopping for better rates. Change can be tough but at the end of the day it may just help you reach your financial goal!
Find a friend or family member to hold you accountable:
Do you have a friend or family member that is also setting financial goals? If you aren’t sure, ASK! Many friends use each other for motivation to eat healthier and exercise more but most times we shy away from asking for financial motivation because it can be embarrassing or seem weird. I can almost promise you that there is someone in your life that is needing some support in finances! You can text each other if considering a purchase that you don’t really need or use “call a friend” when you have that craving to buy that overpriced coffee. Having accountability with your spending can also help you manage your mental health in this area, because of the sheer fact that you know that you aren’t alone. Having someone check in with you about your financial goals can help you share your successes and failures and will trickle into other areas of your life where you may be struggling emotionally. I am not saying that you must deprive yourself of all the things you enjoy! I am simply suggesting you scale back and consider a “DRY” January and February by way of spending so you can reach your financial goal.
Make your financial goal a priority and a habit:
Why is this important? We often set goals that only last a few weeks before we forget them. How often have you set the goal to walk more, watch less TV,, scroll less or eat healthier just to find yourself back to the normal routine within weeks? Making your financial goal a priority will make it a reality.
To do this, write about why finances are important to you, more specifically why is this specific financial goal significant to you? Be mindful of it, set reminders in your phone, laptop, iPad to remind you just how important this goal is. At the end of every week or on every pay day revisit your goal, consider what is working and what isn’t working. Treat it as important as any other aspect of your life. It will feel good when you gain control of your finances and know that there is light at the end of the tunnel.
If your finances have been causing you some emotional strain and are affecting your mental health, January can be a good time to set some new paths and realistic goals for yourself. Connect with others, set a plan, and make 2022 a year that you become more of who you want to be in your financial life.
If you would like help managing the emotional and mental impact that your finances are having on you, please reach out to one of us at Panorama Wellness Group. I know that this is an area that I am passionate about, and would love to walk alongside you this year and help you find success, connection, and mental wellbeing.
