A Guide To Setting Financial Goals For The New Year

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The new year is now well underway. But, even if you’ve already abandoned many of your resolutions, it’s not too late to take stock of your financial life. By adopting the right habits and setting the right objectives, you can achieve prosperity in the long term.

So, exactly how might you go about doing this? Let’s consider a few important steps.

Assess Your Current Financial Situation

To begin with, you’ll need to set a budget. That means first working out how much you’re earning, and how much you’re spending. How much are you paying in interest on your mortgage? If you’re renting, you might think about your monthly payments, and how much scope you have to save – or pay down your debts.

Define Clear and Achievable Financial Goals

If your financial goals are vague, then they might end up being next to useless. Instead, all of the goals you set should conform to SMART criteria. They should, in other words, be specific, measurable, attainable, relevant, and time-bound. You might seek to build an emergency fund that’s generous enough to cover you for a given amount of time, or to save for a major expense, like the deposit on a new home.

Having a clear objective in mind will help to keep you motivated, especially if you’re able to break that objective down into monthly, or weekly, targets.

This is particularly important if you have a lot of separate debts to worry about. You might prioritise the high-interest debts first, and use consolidation loans to simplify your outgoings, and ultimately drive down the balance faster.

Begin Expanding Your Investment Portfolio

If you put all of your eggs into a single basket, then you might be exposed to risk. For example, if your investment portfolio consists entirely of US tech stocks, you might have found yourself out of pocket after the latest AI-driven disruption. Think about how much risk you’re willing to tolerate, and then spread your investments accordingly.

Platforms like Tradu make it easier than ever to navigate markets, and to trade in assets of many different kinds. This puts you firmly in control of the risk you’re taking, and of the brands and commodities you’re investing in.

Create a Realistic Budget and Savings Plan

Your household budget should be informed by your financial goals. It should cover all of your regular, predictable outgoings, while still leaving you a little bit of flexibility so that you can cope with unexpected emergency situations. In many cases, you might find it useful to budget using specialised software, or a smartphone application. There are many options available, each of which comes with its own unique advantages and drawbacks.