Financial Goals for 2020
First published in City Press
The start of a new year, and in fact a new decade, is a great opportunity to reflect on life. Your successes, life events, family and work situation. It’s also good to assess your finances, financial habits and set some exciting financial goals for yourself.
New Years resolutions and goals have the tendency of being broken quickly, often due to the fact that they’re hastily made, too ambitious or simply unrealistic based on your personality type or personal circumstances.
Good goals however are realistic, achievable and fun. We often miss out on the fun part, but we need to understand what’s in it for ourselves. Why are we saving, what are we getting from it, and how will it make us feel when we achieve it.
Restricting ourselves by always saving money for no real reason is hardly motivating, but knowing that you’re saving towards an overseas holiday, a wedding or some other special event can make it all the more rewarding.
My own goal for 2020 is to pay off my home loan and become completely debt free. I’ve been working on this for some time already and based on my calculations, it’s achievable for the year. It doesn’t necessarily mean that it will be easy, but a little determination can go a long way.
Being debt-free is a vital step in my FIRE journey (Financial Independence, Retire Early). The benefits for me include having more disposable income, being able to invest aggressively, and being in the privileged position of deciding where and how to spend my money without the pressures of debt repayments.
When setting up your own goals, take a holistic view of your finances find some manageable goals to work towards that make sense to you. Here are some tips when looking at your 2020 goals.
Understand your current situation
Create a list of all your investments and balances, as well as all your debts. It may be an idea to request a free credit report and analyse the credit information listed against your name.
Also look at the upcoming expenses that you know about such as school uniforms and fees, car services and birthday dinners. Glossing over the last years bank or credit card statements may assist with seeing some trends and reminding you of some of the larger expenses.
All of this should give you a fairly good idea of your overall financial state for the upcoming months and can guide you as to where to focus your efforts.
Create and work with a budget
A budget allows you to plan your spending based on what you actually have available, as well as your priorities. The trick to a successful budget though is to keep track of your spending and ensure that you live within your means, even if you don’t quite stick to your budget.
Think of a budget as a paint-by-numbers image, and tracking your expenses as the actual painting of the picture. You don’t need to be exact, but using the outline as a guide you can create a beautiful painting.
Setting up a budget can be as simple or complex as you would like. Some people have broad categories of spending whilst others track things down to the cent. It’s your money and your plan. The important point though is that you have a plan.
Find a trusted friend to share your journey with
An often overlooked aspect of personal finance is the ability to share your goals, budgeting ideas and financials with a trusted friend. This gives you the opportunity to bounce off ideas with a “third party” who is not directly affected by your decisions.
They would generally ask questions, raise concerns and help you think of things differently. Such a friend should also be able to check up with you on your progress towards your goals.
Whether you have large goals for million-rand deals or small goals of changing financial habits, don’t miss out on this opportunity now to reflect on the year past and think about what you would like to do differently.
Thank you for a well written post. It is simple to understand and covers the important points to consider when setting your financial goals.
In my New Year’s Resolutions post at the beginning of the year, I set targets of reducing my debt by 25% this year and to increase my investment value by 15%, but these figures were not really calculated to see if it is realistic. I will stick with it and post a review on my progress later in the year, but as you rightfully pointed out, the goals should be realistic, achievable and fun.
I really like your idea of finding a trusting friend to share your finances with, but I don’t have anybody I can think of that would be a good soundboard. I use my wife to bounce ideas off, but she trusts me too much and will rarely challenge my ideas or decisions.
Good luck on achieving your goal of being debt free by the end of the year.