This post was written by Heather Burgette, MBA, employee financial educator, Parkview Health.
Congratulations! You are about to enter a new year, which is even more thrilling considering the one we’ve all been through. For millions of Americans, 2020 was a wake-up call, exposing many people’s financial situations. Whether you want to pay off debts or build up emergency savings, these goals will not happen unless you create a plan.
Make a plan
We call it personal finances because it is personal. Picking your financial goals based on what someone else is doing doesn’t mean it’s the right choice for you. Instead, be deliberate in choosing the goals you want and can focus on right now. Remember to start small and make a plan. I encourage you to utilize these tips to begin setting your personal financial goals for 2021.
- Brainstorm: Grab a pen and paper and sit in a room where you won't be disturbed for about 20 to 30 minutes. Then, as fast as you can, write down as many financial dreams and goals that you can think of at that moment. Allow your thoughts to flow freely onto the paper without editing or judging them. There will be time for that later. As you brainstorm the possibilities, think about the financial difficulties that frustrate you and the financial dreams that you've been afraid to pursue. Think about what you'd do or dream if it were impossible for you to fail. As you brainstorm, think about every area of your life you’d like to be free: Would you like to own your own home? Become financially independent? Help a loved one with a big financial need? Supply your children with money for college? The possibilities are endless.
- Prioritize: After about 30 minutes, you should have a page or two full of possibilities for your list of financial goals. Once you do, begin to think about which of these goals is most important to you. Which ones bring you peace or excite you the most? Those are the ones to put at the top of your list.
- Identify challenges: Next, you’ll want to write down all the challenges that stand in your way. After you've chosen 3-5 financial goals that excite you, create a new page for each one. Write the goal at the top of the page. Then, list all the reasons you think you can't achieve this goal. Your list of obstacles will provide you with concrete next steps that will quickly banish your fear of failure. Come back to this list later and ask yourself how you can overcome each of these challenges: Who can help you? What are your next steps? What resources do you need? What information do you lack? Instead of denying the challenges on the road to your goal, meet those challenges head-on by thinking through them in advance. When you do, nothing will stop you from reaching the financial goals you set.
- Create an emergency fund: One of the simplest ways to dramatically increase your sense of excitement, peace, and joy in life is to prepare for when things go wrong financially. An emergency fund of one month's income frees you from much of the financial stress you're currently feeling. Once you save enough money for your emergency fund, commit to only using this money in the case of real emergencies. This fund ensures the train to your financial dreams stays on track. You'll be surprised how much of your day you spend worrying about finances. This concern banishes with your emergency fund.
- Focus on action steps. The result of your financial goals should drive you to keep moving forward. In some cases, it can hinder you from progress by making you feel overwhelmed, but don’t let that detour you. Instead, focus on putting one foot in front of the other, taking one step at a time until you reach your destination.
- Be patient with yourself. Anything worth doing takes time and diligence. Don’t toss the plan out just because you get off track. Make adjustments and keep going.
Final thoughts
Finances are a source of stress for many people. However, if you put these tips into practice, your financial situation will be different. Instead of chasing your tail and feeling like you'll never get ahead, you'll be excited about the future and about the peace of mind that comes with a healthy financial life.
Lastly, if you’re looking for help and unsure where to start, try reaching out to a financial professional or contact your Employee Assistance Program if your employer provides these services.
