With the New Year ahead and holiday fanfare, this is a great time to set financial goals, especially if you’ve recently spent a lot of money on gifts and travel and want to get your finances in order.
Right now, you may be highly motivated to solve each of your money problems in the next few months, but everyday life is sure to get in the way. Your financial to-do list, once full of promises, may end up in the back of your desk drawer while you take care of more pressing matters.
So how can you increase your chances of success? It all comes down to admitting that you won’t have the time or energy to complete every task to perfection. Creating a system where you can prioritize, plan ahead, and take responsibility can help.
Consider unexpected high-impact activities
Many people start by setting themselves the goal of cutting down on unreasonable expenses, which can certainly be beneficial, but there are other ways to make a significant difference. Taylor Schulte, a certified financial planner and founder of San Diego-based consulting firm Define Financial, recommends starting with a few overlooked financial challenges.
Freezing your credit is a quick and easy way to protect yourself from identity theft. This can be done free of charge and you can temporarily remove the block when applying for a loan or credit card. Schulte also suggests looking into umbrella insurance, which offers additional coverage beyond what your auto, homeowner, and other insurance policies provide. This coverage can save you huge personal expenses in the event of a lawsuit.
Basic estate planning, including drafting a will, is another thing to put at the top of your list. Postponing this task can create a big headache for your loved ones if something unexpected happens to you. “I know this is a pain point and often forgotten,” says Schulte.
It is always important to pay attention to your expenses, but do not neglect the measures to protect your money, yourself and your loved ones.
Focus on what really matters to you
So many money goals are born out of social pressure. You “must” want to save up to own a house, even if you’re happily renting it. You “have to” sacrifice short-term needs and want to save as much as possible for retirement, even if it makes you feel left out. But money goals should be tied to what matters most to you. Otherwise, you will quickly lose interest.
“If you don’t know which goals to choose, go back to your values and let them guide you towards your goals,” says Eric Roberge, a certified financial planner and founder of Beyond Your Hammock, a Boston-based financial advisory firm.
You can combine goal setting with a bit of planning to keep expenses from rolling in on you throughout the year. Think about what expenses are expected to come up in the next six to twelve months, such as regular bills, vacations, expected home or car repairs, and other expenses. This approach allows you to set aside money each month for planned expenses as well as long-term goals.
It can be too easy to forget your goals, so to remember something, write it down. It could be a simple handwritten list you keep on your fridge, or an online calendar reminder that nudges you from time to time.
For urgent goals, set deadlines. One tactic is to make multiple lists based on what you need to accomplish over the next week, month, or three months. As time passes and you mark items, you can update the list.
Enlist the help of others as well. Weekly or monthly family financial meetings are helpful if you are doing financial tasks as a group. Or share your goals with a trusted friend or family member who can act as an accountability partner. Obsessing over loved ones can help you stay on track. “We don’t mind letting ourselves down,” Schulte says. “But we hate letting other people down.”
Determine when “done” is better than “perfect”
It’s easy to get stuck in decision mode trying to pick a high-yielding savings account, credit card, or investment opportunity, but in the end, you need to make a good enough choice. Taking action now can have a more positive impact on your life than waiting until you carefully consider each option.
Roberge says that while he would prefer to optimize every financial decision, he doesn’t because otherwise he wouldn’t hit the mark. “Everything in moderation is what I live by,” he says. “Going to extremes about one thing at the expense of other important things doesn’t work in the long run.”
This article was written by NerdWallet and originally published by The Associated Press.