Christmas is gone and so is your money—now what?
It turns out a lot of us lose sight of our financial goals and get a little too caught up in the holly, jolly spirit.
The National Retail Federation reported that the average consumer planned to spend $1,048 on everything from presents and lights to garland and tinsel this year.1 And SunTrust Bank said 56% of Americans felt pressure to overspend during the Christmas season.2 Were you that person?
Listen. You can’t go back in time and fix your mistakes, but you can take control of your future. The new year is knocking at the door. Now’s your time! Here’s how to make achievable financial goals and start 2020 off on the right foot.
What Are Financial Goals?
The phrase financial goals sounds a little stuffy, doesn’t it? That’s pretty much because it is. But don’t let that throw you. Financial goals are just measurable money goals you set for yourself. And they can be big—like paying off all your debt. Or they can be small—like saving $10 from each paycheck for next year’s Christmas budget.
No matter what your goals are, you need to make a plan to reach them. Here’s how to get started.
5 Ways to Get Your Financial Goals Back on Track
1. Create a budget.
First things first . . . you need a budget! It’s the number one way you’re going to hit your financial goals. Sit down with your spouse or accountability partner and be intentional about giving every dollar a name. It’s easy to let your spending slip right through your fingers. But sooner or later, those bank statements will rear their ugly heads, and you’ll have to face the music. Making a budget shows you how your money is working for you so you aren’t constantly wondering where the heck it all went.
Start budgeting with a free trial of Ramsey+ today!
We know, we know. Nobody likes the word budget. People think of it as a strict set of rules they have to follow, which basically means giving up their freedom to make purchases willy-nilly. But the truth is, a budget actually gives you freedom to spend. Wild, isn’t it?
Our free budgeting app, EveryDollar, makes this super easy. Just plug in your income and expenses, and you’ll be able to see what’s planned, spent and remaining for the month. Best of all, it’s quick—we’re talking “budget in as little as 10 minutes” quick.
Here’s a pro budgeting tip to get you started: Make room in your budget for fun money. It doesn’t matter if that’s $5 every two weeks or $50 for the month—just make sure the number fits in your budget. Use that money for anything extra you want.
That might mean splurging every two weeks on coffee from your favorite java joint. Or you can save up your fun money for that pair of fancy rain boots you’ve had your eye on. Believe it or not, having money to spend on fun stuff can really help you stick to your budgeting goals!
2. Set SMART money goals.
How is a SMART goal different than any old regular goal? Here’s the deal with a SMART goal. It is:
Specific: For your goals to work, you need to focus on exactly what you want to achieve. Be as specific as you can.
Measurable: Make sure your goals include something that can be measured so you know when you’ve crossed the finish line.
Achievable: Don’t reach for the moon here. Set goals for yourself that push you but are reasonable too.
Relevant: Are your goals relevant to who you are and how you’re trying to better yourself? Becoming the world’s best pilot when you’re afraid of flying just wouldn’t make sense.
Time-sensitive: Give yourself daily, weekly and/or monthly steps to help you see the progress you’re making toward meeting your goal by a certain time.
What do you want to accomplish with your money in 2020? Setting SMART goals will keep you motivated and excited about the future. Plus, it’ll help you remember your money goals are just as important as the goals you have for your career, relationships and personal development.
And your money isn’t going to change on its own. You have to tell it what to do. Start the process by making time to dream about what you want to accomplish. Think short term and long term. Are there vacations you want to take later this summer? Do you want a new dining room table in time for Easter? Wouldn’t it feel great to have three to six months of expenses in an emergency fund this year? Maybe you could even wipe out your smallest debt by March.
The best way to set SMART goals (and stick to them!) is to write them down, including all the things you need to do to get there. Something amazing happens when you take the time to write down specific goals. Instead of keeping them in your head as thoughts floating around, writing them down actually helps you achieve them.
Plus, putting your goals in writing is a great way to hold yourself accountable and track your progress along the way.
3. Get a refresher on the Baby Steps.
So, you fell off the wagon and got carried away with overspending at Christmas? Yeah, that’s not ideal, but you’ve got to learn from it and leave it in the past. It’s time to get back on the horse and get working on those Baby Steps again! Not sure exactly where you’re at in the Baby Steps? Take our quick three-minute assessment to find out.
Once you know what step you’re on, it’s time to get crackin’. Rip the Band-Aid off. Get out your budget, and start looking for ways to build your cash back up. Figure out where you can save money. There are plenty of ways to cut back if you just know where to look!
4. Use the debt snowball to pay off your credit cards.
If you used plastic to pay for Christmas, it’s time for a change! Grab those shiny little credit cards and cut them up. Or shred them and make an art project out of the pieces. Whatever you do, get rid of them for good.
Don’t keep them lurking around in your wallet like that old acquaintance you can’t seem to unfriend on Facebook. Cut them up. Pay them off. Close the accounts. See ya never again, credit cards. Done-zo. No more. Hasta la vista, baby.
Meanwhile, use the debt snowball method to pay off your debt. It’s simple. Just list your total debts in order from smallest to largest, and start attacking the smallest debt. This way, you’ll feel empowered by the small wins you make every time you pay something off and get it out of your life for good. It’s exciting. It’s motivating. And it will help you stay the course!
5. Start using cash!
Seriously, you don’t need credit cards. They aren’t a safety net for making ends meet or covering you in an emergency. They aren’t more convenient than cash or a debit card. And they won’t make you rich (no matter how many stupid rewards points you rack up). We’ve heard every excuse in the book for keeping credit cards around.
So, what’s the alternative to living without credit? It’s paying for things with money you actually have. We know—what a thought! This means from here on out, everything you buy needs to be paid for with cold, hard cash or your debit card, or even pennies and quarters . . . whatever works for you.
Worried about losing your cash? The envelope system makes it easy to keep everything organized and safe. And you might be pleasantly surprised too. Buying things with cash feels pretty good! But if you find that using a debit card is easier, you can still treat your debit card like cash. With EveryDollar, you can budget for each purchase just like you would using a regular cash envelope.
Keep Your Eyes on Your Financial Goals
From the very first day, start off 2020 with these five steps for your money—and get ready to feel different by the end of the year. It’s going to take time and effort on your part, but you can do it!
And if you want some extra inspiration (for when the flashy newness of the year wears off), take our free three-minute assessment! Answer a few quick questions for us, and we’ll give you a personalized plan for exactly where you’re at in your money journey right now. Learn how to manage your money, knock your goals out of the park, and kick butt in 2020!
You’ve got this!