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How to Set Financial Goals for Better Money Management in the New Year

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January 13, 2020
By:
Shorey Andrews

A new year can bring on a boost in motivation to get your finances in order. The rush of the gift-giving season is over, and now your bank account is looking worse for wear. The beginning of a new year should be viewed as a fresh start, and the potential to set new and ambitious goals to manage your money is at an all-time high. Goal setting can sometimes feel overwhelming because it can be difficult to pinpoint where to begin and how to get the ball rolling. All you need to get started is some expert advice, and a little nudge in the right direction.

Here are 5 easy financial goals to set for the new year: 

1. Set money aside for an emergency fund 


It’s impossible to know what life will bring, and that’s why it’s always a good idea to begin setting aside money in your emergency fund. Emergencies can range from unforeseen health-related issues, car maintenance you didn’t think you would need, or if you are suddenly laid off and need to make ends meet. The amount you put aside each month is up to you, but keep in mind that an emergency fund is different from saving for a large purchase or a vacation. 

2. Improve your credit score 


Working towards improving your credit score should be a year-round goal. Your credit score can impact your ability to be accepted for new credit cards, cellphone plans, rental units, and more. So it’s essential that you pay your bills on time and manage the rest of your money accordingly. There are many ways to review your credit score, but Credit Karma offers this service at no charge. 

3. Pay off your debt


A popular goal to set for better money management in 2020 is paying off your current debt. It can seem overwhelming at first, but breaking down everything you owe outside of your bills will help you understand precisely where you need to focus your attention. From there, you can build a plan to pay off credit cards, student loans, financed items and more. 

4. Commit to spending cash 


For entertainment needs and everyday purchases like your morning latte, commit to spending cash instead of swiping your card. Committing yourself to a specific amount of money to spend each week can help you stay on top of your budget, save money, and stop you from overspending on things that are not bringing you value. 

5. Monitor your feelings towards your spending habits 


Make it a point this year to check in with yourself so you can begin to pay attention to how your spending habits are impacting the way you are feeling emotionally. Start by asking yourself questions before you make a purchase, so you can begin to identify what makes you happy and what doesn’t. Once this becomes a part of your everyday routine, you will start to learn how to spend with intention instead of creating a habit out of impulse purchasing. 

Photo Credit: Estée Janssens

Try these 4 simple ways to stay on track with your financial goals: 

1. Set a budget and stick to it 


Building a budget is the first thing you will need to do before you can begin working towards your 2020 goals. Seeing your money in all the same places will help you determine where you want it to go and how you are going to manage it along the way. There are several ways to create and manage a budget, so do your research or reach out to a friend or expert to help you get started. 

2. Book a meeting with your preferred bank 


The beginning of a new year is a great time to meet with your preferred bank or financial advisor to gain a better understanding of where you currently stand. They can help you review the state of your account and make recommendations on how you can improve your current financial standing by offering products to suit your needs. 

3. Seek the resources to educate yourself 


It’s always best to do your research before making any big decisions, and that is especially true when it comes to your finances. The education you seek depends on the goals you have in mind and what products and services you will need to familiarize yourself with. Financial literacy can be as simple as conducting a Google search to find the information you need. Still, you should also look out for panel discussions, free seminars or other events that can be easily found on most social networks. 

4. Use a money management app to help you stay on track and organized 


The Wellspent app is a great resource to help you learn how to spend mindfully in the new year and beyond. Once you link your bank account, Wellspent will automatically ask you to reflect on the purchases you’ve made within the last 30 days. The more you reflect on your purchases, the more the app can help determine what’s bringing you value and what isn’t. It will also suggest areas where you can improve and help you set goals towards better spending. 

Find out more about how Wellspent can help you get your finances on track for the new year ahead. 

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This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change.  No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.