Tip #220 - Set Your Financial Goals for 2010. At the end of last year, I suggested you review your financial goals from 2009 to see how well you did achieving them. Well, now that it is the beginning of a new year, it is time to set some new financial goals. The first rule of setting a financial goal, or any goal for that matter, is for it to be realistic. My goal could be to earn $300,000 this year, but that's not going to happen, so there's no reason to set a goal that will not be met. Your financial goals should be in line with your income, and it goes hand in hand with creating your budget which we will discuss in the next post.
So first think up, and then write down your financial goals. They can be adjusted and tweeked in the next day or two when you write up your budget. Your financial goals can include how much you want to save up this year. The savings could and should be further broken down into categories - savings for retirement, savings for a new car, savings for college, etc. The more specific the goal, the easier it is to achieve. Your goal can include the income levels that you want to meet in these jobs. Maybe you owe money for a credit card, student loan, or a car. Your goals could include how much you want to pay off on those loans or how much extra you want to pay each month above the minimum.
The goals could include how much you want to earn this year. If you have a salaried job, this might not be plausible. But perhaps you run a side business making hairbows or selling on eBay. Or maybe you have a job where you are allowed to put in overtime. Your fianancial goals could also include how you want to manage your money. Do you want to only pay cash in the upcoming year? Do you want to pay off your credit card each month? Perhaps you want to keep money in envelopes for each budget category.
Spend a few hours or a day thinking about what you want to achieve financially in the coming year. Start writing down these goals and then in the next day or two you should write up a budget that covers your expenses. Your budget may show that some of your goals are not realistic and you may need to adjust them. Or, on the other hand, your budget might show a lot of extra fluff that can be taken out, and you can raise your goals. We will talk about budgets in the next post. In the meantime, think about your goals and get them written down.
In Real Life (IRL) - I reviewed our 2009 financial goals a couple of weeks ago. Most of the goals we were able to meet - putting $2,000 into each of our children's education funds, putting the full amount allowed at my husband's company into his 401(k), and paying down our mortgage on our condo in Florida. Other goals we were not. We were hopeful to put $5000 each into a Roth IRA for both me and my husband. We fell a few thousand short on that front. We also didn't allow for enough money to be spent on gifts and unplanned expenses.
Over the past few days I have thought about our financial goals for 2010. Many of them remain the same. We plan to put $2,000 into each of our children's education accounts. We are fully funding my husband's 401(k), and we hope to put $5,000 into each of our Roth IRAs. We also hope to catch up on our 2009 Roth IRA shortfall. We have until April 15, 2010 to do so. We are on track to pay off our condo's mortgage by year-end, so that is a continued goal that is being carried over from last year.
Another goal of mine is to increase my income by taking a part-time job. I worked full-time before I had children and went part-time after that until my third child was born when I stopped working altogether other than selling on eBay, which brings in minimal income. Since my youngest will be turning 3 this summer (how can that be?), I am going to try to work part-time while he goes to preschool a few days per week. We haven't written our our formal budget yet, but we are expecting our expenses to go up in the next few years - a Bat Mitzvah to save for, a new minivan to save for, and more frequent Hebrew lessons. A part-time job would be able to cover these expenses.
My husband and I will be writing up our formal budget over the next few days (after we unpack!), so some of these goals may need to be tweaked. In the meantime, this is what we hope to accomplish financially in 2010.