5 Steps to Create Resolutions You’ll Actually Reach

The perfect new year’s resolution is one that is attainable and will lay the groundwork for future success. The new year is a great time to check in on your financial plan. There is no better way to go into 2024 than with a fresh and healthy mindset that will help you achieve all your goals. Below are five steps to help you create your 2024 financial goals.

Step One: Check in on your current financial situation

In order to set goals, you first need to check in on your current financial situation and see where you can improve. Understanding your personal finances can help you create informed financial decisions. One way to gain insight into your financial picture is to review your net worth. Net worth is a measure of what your individual finances are worth based on your assets and liabilities. You can learn how to calculate your net worth here: Understand your net worth In addition to your net worth you should check in on any other financial items you may have, for example: 

• Current monthly budget.
• Check your credit report.
• Review your debt (credit cards, mortgage, car loan, etc).
• Assess your retirement fund or 401K.
• View your emergency fund.

Knowing where you are starting the year financially can help you make realistic financial goals for your future. 

Step Two: Picture where you want to be

Now that you understand your current financial picture you can decide what you want your finances to look like at the end of December 2024. Consider the following questions:

• Are you happy with your current financial picture? If not, what would you want to change?
• What financial goals did you have in the past? Were you able to reach them?
• Where do you want to be financially? Picture what your account balances would be, the levels of debt you would have (or not have), and consider your retirement accounts as a starting point. 

It's important to really think through what you want your future to look like so that you can make goals that will help you make this picture your reality.

Step Three: Set goals for the new year

Knowing where you want to be financially is the first step to deciding what your goals should be. Next, you can brainstorm goals you want to work towards in 2024 to achieve your financial picture. Create goals that are specific, measurable, and achievable. Your goals may center around paying off debt, creating an emergency fund, saving up for a significant purchase or vacation, or any other financial area.

To ensure that your goal is measurable it is important to calculate how much money you will need to achieve it. The most common way to calculate your financial goals is to divide your monetary goal by the amount of time you have to save or pay to reach your goal.

For example perhaps you want to save $4,200 by the end of the year for a vacation. Using a basic equation, you can quickly see how much you need to allocate towards this goal in order to reach it by the end of the year. Simply divide the amount you want to save by the number of months or weeks you want to save towards your goal. In this example you want to save $4,200 over 12 months.

$4,200 (the savings goal) / 12 (months) = $350

If you save $350 a month, which can be divided further to $87.50 a week, into your savings account, you will reach your savings goal of $4,200 in one year.

This same strategy can be used to save for a vacation, increase your emergency fund, or to save for a significant purchase. (If you are paying towards a debt you will need to also account for interest accrual. To more effectively decide how much to pay monthly towards a debt with accruing interest view our loan calculator to help you ensure you are paying enough to reach your goals: Enhanced Loan Calculator | Financial Calculators | Northwestern Bank).

Step Four: Create a plan of action

If you are not currently on track to reach your new year’s goals, do not worry. A well-crafted plan will bridge the gap between setting goals and achieving them. You can start by breaking your goals down into actionable steps.

List specific actions required to achieve each goal. If you aim to save, consider setting up automatic transfers to a dedicated savings account. If reducing debt is the goal, consider if consolidating is right for you or creating a new repayment schedule. Decide exactly how much you want to save each week or month towards your goal by using the equations above in step three.

If you don’t already have one, consider creating a budget to take control of your spending and direct your money to areas that will impact your financial goals. (Want to learn more about creating a budget? Click here to learn how)

Other ideas to consider adding to your plan of action may include allocating more to your emergency fund, and increasing contributions to retirement, savings, debt payments, etc.

Step Five: Follow your plan

By planning for healthy financial habits and setting realistic goals, you are setting yourself up for a successful and responsible new year. Now that you have a plan for your specific financial resolutions, you can begin to follow it. Continue to review and update your plan to ensure that you are consistently on track to reach your goals throughout the year. You may need to adjust your goals as your financial situation changes. Unexpected expenses do occur so it is important to make adjustments to your goals if they are no longer realistic. In some cases, you may need to completely refine your goals and that is okay. 

Creating goals for your finances will kickstart your new year financial health. The key success lies in creating and consistently following a detailed plan, prioritizing your goals, and determining financial strategies for a secure and successful year. 

Learn more about personal finance on the NB Blog.

The NB Blog - Financial Eduation | Northwerstern Bank (northwesternbank.com)

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