Start 2012 Off Right

We’re only a few days into the new year, and chances are that several of you have already broken at least one of your new years’ resolutions.  You’ve eaten way too much food.  You’ve skipped a day at the gym.  You’ve overspent on some key category.  Partially, it’s not your fault.  You probably made resolutions that wouldn’t stick in the first place.  They just aren’t specific enough.  Resolving to “lose weight”, “work out more”, or “spend less” are useless resolutions.  You’ve got to get specific with them.

Set some specific GOALS.

Instead of just making resolutions, create some specific goals to go along with them.  Instead of “lose weight”, set a specific goal, like “lose 15 pounds”.  Setting a goal not only gives you a specific benchmark to gauge your success, it also helps to motivate you to accomplish those goals.  Financially, we can use this to our advantage.  What spending events do you know will be happening in the coming year?  Maybe you’re like us, and will need a new set of tires for one of your cars before the next winter hits?  Set a specific goal to save so that the spending event doesn’t catch you with your proverbial financial pants down.  January is a terrific time to start planning your savings and spending goals for next Christmas.

Track your progress.

Setting goals doesn’t do you any good if you don’t track your progress towards accomplishing them.  Whether you’re weighing in to track a weight lose goal or tracking account balances to track progress towards a savings goal, you’ve got to track them.  There are plenty of ways to go about it.

1. Create a list of your goals – This doesn’t have to be all that fancy.  In fact, you can do it on a sheet of paper if you like.  Just list the goals, the amounts your saving towards the goal, and leave room for a running tally of how much you’ve saved towards the goal.
2. Track your progress – The accountants in the crowd will have a savings account with ledger balance entries that mark each penny for the goal that it belongs to.  If you’ve just got a list, just keep a tally on the list of how much you have saved.
3. Keep your hands off – Be disciplined about your savings goals.  That money has a purpose, and the fact that you haven’t spent it yet doesn’t mean that it’s available for other uses.  Pick a high interest savings account and invest your savings. Once your money is in a savings, it stays in the savings account until the event/expenditure that it was saved for arrives.
4. Spend what you’ve budgeted.  Saving for expenditures can be a great way to keep yourself to a budget. Once you’ve met your goal, that’s the money you have budgeted for the expenditure.  Don’t dip into your other funds to spend more on the event.  Keeping to your budget will help you reach your overall financial goals.

Setting specific goals and being diligent about tracking and saving towards those goals is a great way to improve your financial situation.  Even if you’re not sure that you can do it, I encourage you to give it a try with a few small goals.  Once you do, and you start to see your progress, you’ll find yourself making goals for all kinds of things in your life.  And, you’ll be accomplishing them more and more often.

Additional note:  I like to use my ING direct account to help save towards goals.  Their system allows for unlimited sub-accounts.  Once you’ve got an account set up, simply create a new sub-account ING Direct Orange Savings and rename it with the name of the goal that you’re saving for and the amount that you are aiming for.  e.g. “New Tires – $750″.  Once you’ve got them all set up, you’ll be able to easily see what goals you are saving for and what your progress is.  Many banks and credit unions will allow you to set up a limited number of sub-accounts, so you’ll have to ask at your institution if you don’t decide to use ING Direct, but I’ve never found another place that makes it as easy as ING Direct.

How do you plan, budget, and save for your financial goals throughout the year?

photo credit: taxbrackets.org