7 Concrete Financial Goals That Transcend New Year's Resolutions

7 Concrete Financial Goals That Transcend New Year's Resolutions
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Did you know that Forbes reported that just 8 percent of people keep their New Year's resolutions? Psychology Today says that such failure often happens when your goals are unrealistic, too broad or not motivating. Rather than setting general financial goals like paying off debt or unrealistic ones like saving twice your salary in a year, consider short-term and long-term financial goals that you can easily track and work on regularly. Such goals may involve saving toward a down payment on your first home or paying off a specific debt. Consider these seven specific financial goals that will likely bring you more success than traditional resolutions.

1. Spend Less by Monitoring Your Finances Regularly

Have you ever made a goal of spending less in the new year just to see no progress or even spend more than you planned? Unless you create a budget and monitor it regularly, you won't know if you're overspending or adjusting your finances for any life changes you experience. To make it easier to accomplish this financial goal, download a budgeting app on your phone rather than trying to track your income and expenses manually. These apps can show you your real-time spending and even let you know when you're close to exceeding your budget on a daily basis. Aim to spend less than planned and stash that money away in savings or use it to pay off debt.

2. Put Three Months' Expenses in an Emergency Fund

Did a medical or repair bill throw you in the red and you want to avoid experiencing that problem again next year? Then consider stashing away between three and six months of your regular expenses – such as for housing, debt payments, food and utilities – in a special savings account for an emergency. Try adding up your bills, multiplying the amount by three or six and then putting aside a regular portion of your paychecks until you fill up the fund. This is one of the short-term financial goals that will pay off in the long run in case you face a job loss, family emergency or illness and will help you avoid costly debt when you're in a pinch.

3. Contribute at Least 10 Percent to Retirement Plans

Setting a generic new year goal to start saving for retirement makes it too easy to contribute too little or even forget contributions entirely in lieu of buying other things. Aiming to put at least 10 percent of your paycheck into a 401(k) or individual retirement account is a good start toward one of the most important long-term financial goals: retirement. Check with your employer to see if any plans, including those with matching, are available and set up regular contributions. If you're self-employed or have no employer options, check with your bank or a provider like Betterment to set up an IRA and contribute money monthly through your bank account.

4. Save Regularly for a Short-Term Purchase

Do you have an expensive purchase planned in the next year like a new computer, vacation or appliance? Rather than just giving yourself a goal to save up for the item and possibly fail at it, divide the cost of that item by the number of months from now when you'll need it (or use a handy savings calculator). You can then set an equal amount aside each month from your paychecks to have the money with less stress than trying to pull it from your budget at once. So, do you need $1,000 for that new laptop in six months? Then simply stash away $167 a month for six months.

5. Pay Off Your Highest Interest Credit Card

Aiming to get rid of credit card debt will save you in interest in the long run, but it can be hard to know where to start when you have multiple cards. For a more successful financial goal for the new year, consider starting with the credit card with the highest interest rate. Take a close look at your budget to find any remaining funds beyond your minimum payment and set a goal to pay at least $25 to $50 extra until that card's paid off. Once you pay off that credit card, use the strategy with the next card with a high interest rate. During the process, avoid charging more to your cards since that will defeat the purpose.

6. Work Toward a Down Payment for Long-Term Purchases

Planning to buy a home or car within the next few years? To secure a loan with less interest, you'll likely need to have a sizable down payment saved up. This amount often ranges anywhere from 5 to 20 percent for a house. While a car down payment can depend on the dealership and bank, putting 20 percent down can help you account for some of the initial depreciation and avoid a longer loan term with additional interest charges. You can use the same monthly savings calculation method as you do for a short-term purchase. Plugging numbers into State Farm's large purchase savings calculator can also help you experiment with your strategy.

7. Track Your Credit to Get It in Shape

Has it been a while since you looked at your credit score or checked your credit report for mistakes? If so, you might experience an unpleasant surprise in terms of a high interest rate or loan denial when you need to borrow for a major purchase. Rather than setting a broad goal to have good credit, use a site like Credit Karma that can alert you of issues and offer suggestions to improve your score. Avoiding new credit applications, paying down debts, avoiding late payments and disputing errors can help you whip your credit into better shape. Aim for a credit score at least in the mid 700s for the best interest rates on auto loans and mortgages.

Your financial goals for the new year don't have to end in failure and frustration like past New Year's resolutions might have. With these seven ideas in mind, start taking some concrete steps to reduce your debt, save money and achieve better financial health.