A new year is upon us, and many families are setting new financial goals. Your family may be creating brand new financial goals, or assessing and tweaking last year’s family financial goals.
Tweaking financial goals based on last year may be a great idea, considering the financial uncertainty the pandemic ushered in. There is certainly a ton of pandemic talk online these days, so we won’t get into that.
Instead, let’s start the New Year off with our financial pasts in the rear view, many miles behind us. It is actually never too late to set new family financial goals. Never a bad time to turn financial stress into financial wellness.
The question is, what does financial wellness look like for your family? It is certainly different for all of us. Begin by visualizing what it takes to dominate this year’s family financial goals.
To assist, we came up with a few effective questions to make visualizing easier, making this year’s family financial goals low hanging fruits. Let’s get to it!
1. What inspires you to achieve your family financial goals?
This is all about the why, and not so much the what, when it comes to setting and achieving your family financial goals. The why is very much important. In fact, the why may be far more important than the actual goals you set.
This is because the reasons behind setting financial goals serves as your motivation. For instance, you may want to set up a family emergency fund. It’s the what. Many people want to set up an emergency fund. However, most people don’t focus on the why, thus losing sight of their emergency fund goal within months.
When you pin down the why, you can fuel your financial goals with serious purpose. Allowing you to stay on track all year long.
2. What do your finances look like right now?
Once you have serious motivation behind your family financial goals, it is time to examine what your current financial situation looks like. As well as what needs to be tweaked in order to accomplish your family financial goals by year’s end.
This means taking a hard look at the family’s annual income, taxes, budget, and overall net worth. Here’s a quick plan of action you can employ to get the ball rolling:
Make a budget. Budgets are absolutely critical if you want to achieve any type of financial goal. If you do not have a budget, sit down and make one today. The general rule of thumb is 50/30/20 method (50 percent to needs, 30 percent to wants, 20 percent to savings).
Emergency fund is a must. In order to build up your financial wellness to be in a good position at year’s end, you need an emergency fund for the family. You never know when an unexpected cost will come your way. Be ready.
How much retirement do you have? Having a retirement is important, because you won’t be able to work forever. General rule for retirement savings is 10 percent of your annual income. This 10 percent can be part of the 50 percent needs or 20 percent savings part of the 50/30/20 method discussed previously.
Eliminate debt. Debt can be a serious problem when you’re trying to set up and achieve family financial goals. Get rid of any debt as fast as possible, even if that means dedicating retirement savings per year.
3. Do you have a plan to set and manage family financial goals?
Setting goals is easy when you just write them down on a piece of paper and go about your day. But if you really want to achieve your family financial goals, you need a strategic plan to set and manage those goals.
You can employ the goal achieving acronym SMART to make it happen. Smart stands for Specific, Measurable, Achievable, Realistic, Time Sensitive. How do utilize SMART for your financial goals?
Let’s say you want to save 30 percent of your annual salary this year. What specifics are involved? Is it measurable and achievable with your specific plan? What realistic measures are needed? And what are the time sensitive aspects?
4. How will you track progress?
In order to dominate this year’s family financial goals, you will need to set up some type of goal tracking. This will allow you to track progress, keep you and your family motivated, and ensure you and your family are still heading in the right financial direction.
A very simple way to do this is to have a spreadsheet in place with weekly and monthly micro-goals that are essential to reaching the yearly macro-goal. For instance, spend for the week vs. needed spend for the week to stay on track. Then track monthly and quarterly.
Make the spreadsheet shareable with the entire family via Google Docs, a free service to gmail users. You may even find apps useful to keep your goals on track. Mint or PocketGuard could prove useful as budgeting mobile apps. For kids, you can check out the Treasure Card mobile app.
What are your family financial goals for 2021?
Even though 2021 is upon us, you can still set up family financial goals. It does take a bit of time to get everything up and running. But once you do, tracking and achieving your family financial goals this year could prove easier than you thought. Financial wellness, whatever that looks like for you, is definitely achievable.