New year, new resolutions. Learn how to set attainable financial goals that stick in 2024 and beyond.
Many people see January as a reset month and make resolutions that they hope to carry throughout the rest of the year. These resolutions often center around exercise, eating habits, and other health or fitness goals. But the beginning of the year is also a great time to set financial resolutions, like saving more money, putting a down payment on a new house, starting a new business or investing more wisely. Whatever the goal, January is the ideal month to reflect on the past year from a financial perspective and create a plan for where you want to be at the end of the year. Here are a few tips to help you set and accomplish your financial resolutions in 2024.
Many people make their resolutions in haste and don’t fully think about the actual goals they’re setting. This can be a recipe for failure. In fact, research indicates that roughly 80% of people fail to keep their resolutions by February.1 One reason is that resolutions require the capacity for change; change causes friction and stress and when the going gets tough, we just give up and revert to our old ways and habits.
Another reason some people fail to keep their resolutions is because their goals are too big, or they set too many and there isn’t a priority about which goal to start on first. Also, humans often want results immediately, but accomplishing big goals typically requires changing habits over time; it typically takes 21 days to form a habit. 2
When setting goals – financial or otherwise – consider the SMART acronym. Goals must be Specific, Measurable, Attainable, Relevant, and Time-bound). Emphasizing specificity (S) and measurability (M) can help you focus on realistic and attainable (A) goals based on where you are today. Relevance (R) ties goals to specific objectives like saving for retirement or a college education.
Lastly, strategic financial goal setting should also be tailored to different time (T) horizons. Some goals take longer to accomplish than others but can also change as your financial situation changes or as you hit life milestones. For example, paying off debt or establishing an emergency fund might be accomplished over the next twelve months, but saving for a college education or retirement often spans many years. Medium and long-term goals should be broken down into manageable chunks that can be accomplished each year. Consider financial goals based on three different time horizons:
Short-term goals (1-2 years):
Medium-term goals (3-9 years):
Long-term goals (10+ years):
In terms of short-term goals and actionable ideas for 2024, in addition to building emergency savings, paying off debt, and revisiting your budget, here are my favorite financial resolutions that can be starting points to better financial health:
Any time is the right time to set financial goals, but the start of the year is the perfect opportunity to narrow the focus and get started. The ideas here certainly aren’t comprehensive, and chances are you’ve already thought of some unique financial resolutions of your own. If your goals are more complex or longer-term in focus, reach out to Mercer Advisors to help you build a plan that’s best suited for your situation and financial goals.
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