Slice from 22seven
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Slice from 22seven

Sticking to financial resolutions đź’Ş

Setting, sticking to, and achieving your financial goals might be more important than ever before this year. Your financial goals should be set with your own personal financial objectives in mind and can be anything from saving for a new car, to increasing your monthly retirement contribution or paying down your debt. After a year like 2020, your goals might be a bit different than usual, or different to other people’s — and that’s perfectly okay!

Setting a financial goal is the easy part; sticking to it and eventually achieving it is where it gets tricky. The good news is you can meet, or even exceed your financial resolutions by following some easy steps and implementing basic financial principles.

Make sure your goals are SMART

Start by making a list of your goals; the things that you are saving for, or the financial outcomes you’d like to achieve. Don’t stop here though, because just listing your goals without setting clear boundaries for each one will only leave you feeling demotivated and disappointed.

SMART goals are Specific, Measurable, Achievable, Realistic and Time-bound. Put a monetary value to each item in your list and set a date for each goal to be achieved by. If your goal is to save for your child’s education, find out how much the first year will cost, and aim to have saved that amount before your child starts school.

When you have a specific, realistic picture of what and when you’re saving for, the final step here is to prioritise your goals from most to least important.

Track your outflows

Before you can start saving towards your goals, you need to be familiar with your usual spend. 22seven allows you to categorise your expenses and make notes on each transaction so that you know exactly where your pay cheque goes.

Many people are unaware of what they really spend their money on every month because all those small expenses add up quickly. By tracking your expenditure, you will know where you can free up some money by cutting down on unnecessary spending and reallocating the funds to your savings pool.

Automate your savings

Now you’re ready to take action. Select an investment option and commit to a monthly contribution into that investment. Work out the monthly amount you need to invest in order to reach your goal on time. If you can opt to automate your monthly debit order, always do that, and set the date soon after payday. This will stop you from being tempted to spend the money on other things throughout the month.

Reward your hard work

Setting up a plan to stick to your financial resolutions can be emotionally draining and time-consuming. Keep your eye on the prize and stay motivated by deciding on a way to reward yourself for achieving your goals. This will help you to remain inspired and it might just be that extra push you need to invest another couple of bucks to reach your objectives.

It’s important to remember that setting financial goals and achieving them is a marathon, not a sprint. Don’t put too much pressure on yourself to reach all your goals in one go. Start slow, perhaps choosing just one goal to focus on at first. Then you can slowly increase them as you become “fitter.” Make sure your financial resolutions are realistic for you, so that you can stay motivated and committed to reaching them.

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Slice is a weekly 2–3 minute read brought to you by 22seven, focusing on all things personal finance. Once a week, every week, we’ll be delivering a fresh slice of useful information straight to you.

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Thoughts, observations and insights. About money, life and 22seven. Visit 22seven.com

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