Do you want your finances to be better in 2014 than they were last year? If so, this post is for you. It can be so easy to lose track over our finances that we need to step back and take the time to figure out what went wrong and develop a strategy on how we can make better choices in the future. Although I am a Personal Finance blogger, I still make mistakes and I need to re-evaluate things every once and a while.
One of our goals last year was to pay our mortgage balance down to $88,000 but we only got it down to $93,000. Why did this happen? Well, the main reason is that my income dropped due to me quitting my job in February and starting my own business. However, I know for a fact that we could have been more diligent about paying down our mortgage and that we would have been a lot closer to hitting our goal. I tell you this so that you understand that personal finance is not easy and that even I struggle with achieving our financial goals from time to time. However, we did pay off $12,500 in principal so we did make financial progress, just not as much as we would have liked.
You have to aim for something
“If you aim at nothing, you will hit it every time.” – Zig Ziglar
If you want to get somewhere in life you need to have a destination. Once you know where you are going, then you can map out a way to get there. Much like planning a trip. We like to travel internationally every two years and in order to do this, we have a Travel Fund that we put $350 into every month. After two years we would have roughly $8,400 to go on a trip. Now we do use some of that money to travel locally as well, but the idea is that we figured it would be about $5,000 to $6,000 to travel overseas every two years and then we mapped out a way to make that happen.
Identify your financial goals for 2014
Would you like to pay off your debt? Perhaps you want to start a fund for your kid’s college. Figure out what your goal is, put a number on it and set a deadline. For example, we want to pay $25,000 toward our mortgage by 12/31/2014. this year. Then figure out what it will take for you to hit that number on a monthly basis. For this example it will take us paying $2083.33 per month for us to hit our goal. Now all we have to do is figure out how we can come up with that amount every month so that we actually hit our goal for the year.
SMART Goals will help
Have you ever heard of SMART goals? These are goals that are Specific, Measurable, Attainable, Relevant and Time Sensitive. As you can see in the example above this is exactly the method we use. Here is the breakdown of what that looks like:
- Specific – Notice how we stated the amount that we wanted to pay and when we wanted to pay it by
- Measurable – The fact that there is a dollar amount associated with the goal makes it measurable
- Attainable – It is attainable as long as we stick to the plan
- Relevant – It is relevant because we are planning our financial goals for 2014
- Time Sensitive – Putting a deadline on the goal makes it time sensitive and helps create a sense of urgency
What would you like your finances to look like at the end of 2014? Do you have some specific financial goals that you want to achieve?