When is a good time to set financial goals? The time is now; in December, when one year is ending a new year is on the horizon. This is the best time to set a few financial goals for the New Year.
So, after the holidays, before you get caught up in work, school, and other busy parts of your life, you can meet with your financial advisor. They can review your current plan and make recommendations.
Before you meet with them, there are several things you can do to improve our financial outlook for 2022 and beyond:
- Set short-term goals: In planning for the coming year, it is best to look at the short-term. You will not accomplish your retirement goals in one year. Make goals that you can accomplish in a few months.
- Create an emergency fund: Hopefully, you will not have some type of emergency and need an emergency fund. An emergency can present itself in a multitude of unexpected ways; it may be medical, unemployment, or automobile related. Ideally, a good emergency fund has 3-6 months of money to pay the bills. This may seem impossible. However, you can start saving a small percentage of your paycheck by placing it into a bank account which you do not touch unless the emergency occurs. (Use this emergency fund calculator to figure out how much to save.) Over time, an emergency fund will accumulate and help you and your family if an emergency occurs.
- Retirement savings: Even though there is Social Security, you may still want to enroll in a retirement savings plan. If your employer supports a 401(3) (k), you should consider signing up for it. Your employer may pay matching funds toward it. If you are self-employed, see your financial advisor for information on the array of retirement accounts that you can enroll in.
- Pay off high-interest debt: Credit card debt and interest are a savings killer. Make it a goal to pay them off as soon as possible and cut up cards that are not needed. Begin with the debt that has the largest percentage of interest and whittle it down. Once you have erased your credit card debt, it will be surprised as to how much money you have available each month.
- Set a budget: This is the last point and, perhaps, the most difficult. Setting a family budget can be agonizing. It calls for discipline and restraint. So, to make it easier, create a spreadsheet with income and expenses. This budget will help you track your spending and saving. It is essential as you check off your goals and make progress.
Setting financial goals can be daunting. But with these financial planning suggestions. They can be accomplished with resolve and hard work. Start now and get on the road to financial freedom.
A.K. Burton has licensed and experienced financial advisors on staff. If you have questions concerning your financial goals, call us at (301) 365-1974 for a consultation. We serve the Bethesda, Rockville, and Montgomery County, MD area.