Does anyone else feel like this year went way too fast?
I probably say this every year, but it feels like my life is in fast forward and I just want it to sloooow down.
Whether I like it or not, a new year will be here before we know it. Even though I love the start of a new year, assessing your finances and setting goals can be a daunting task, especially after you look at your bank statement after the holidays.
Today, I want to share a few tips with you on how you can make a new and improved savings goal to help you prepare for the future and even splurge on occasion.
How To Make Savings Goals For The New Year
No matter what your income level is, these tips will help you to decide where your savings funds and will go in your budget for the new year.
Evaluating your income, savings, and future expectations is a must, and I have some easy suggestions to guide you through this process.
The tips below all center around using a budget. If you need help getting started check out my free monthly budget template.
Get real about your current income and expenses.
Whether you are already saving money, or not, it is always the best to start with the basics.
A regular assessment of your income and expenses is recommended throughout the year, but especially when you are setting savings goals for the New Year.
You want to take the time to make sure that everything is being covered already, and you have no items going unpaid in your household budget.
Basic budgeting rules include listing all income sources and all outgoing expenses.
Subtracting expenses from income should result in a balance leftover that is flexible income. However, if you are living paycheck to paycheck this amount may be non-existent.
That is when you should evaluate your expenses more closely to find any wiggle room.
If you find that you have excess funds at the end of the month, it is easy to proceed forward to creating your savings goals.
If not, then you need to take a moment to really look at your budget and find ways to create more flexible income.
This can be nearly impossible for some families. In those cases when you simply don’t splurge or have any extra expenses, it is time to look for alternate income sources.
We have some great articles here already for you on how to become a virtual assistant or even some side hustles for your spare time. They are a perfect resource for increasing your income to create that wiggle room you need.
Make sure your budget has these items included:
- Housing (rent or mortgage)
- Utilities (electric, gas, water, garbage pickup)
- Transportation (bus pass, car payment, car insurance, gas for car, vehicle maintenance)
- Food (all meals including school lunches, breakfast, dinner, lunch at home, or at the office)
- Insurances (health, life, dental, vision, home owners, renters, and business if applicable)
- Telephone and Internet (if needed for school or work)
- Entertainment: While not mandatory, it is important to not stretch yourself so thin you are frustrated and overspend. Even a $5 entertainment allowance for movie rentals or an ice cream out is a way to fit a splurge into your budget.
Determine what expenses are worthwhile to you and your family.
When it comes to actually setting savings goals, you have more than just a number in mind, but the expense for which it will be used.
Saving $1,000 is great, but what is the purpose of the savings itself?
By taking the time to determine what the savings would be for, you can easily remind yourself why the goal is so important.
Savings goal suggestions in order of importance to most families:
- Emergency savings for last minute repairs, medical expenses and rainy days.
- Needed home or vehicle upgrades or renovations (it is better to save specifically for these and replace before they become an emergency expense).
- Education expenses for your children or yourself if you desire further education.
- Retirement savings or long term care savings
- Savings for unnecessary upgrades to your home, vehicle, or hobbies (this includes a dream home or new car when your current is functional and in good shape).
Create a long term plan and short term goals.
It is vital to set realistic savings goals for yourself. I prefer to make long term goals to reach for, then break those down into smaller, more manageable goals for the short term.
Larger goals would be saving to buy a new vehicle outright without financing. Smaller goals would be to set aside $20 per paycheck to reach that goal.
By breaking down your ultimate goals into manageable smaller goals with action steps, you make it possible to keep your focus to reach those goals at a faster pace.
For many people, the goal of saving for retirement may seem unnecessary in their 20’s, but reaching their 40’s they soon realize how fast that need is approaching. By planning early, you have plenty of time to form a habit of putting aside small amounts to reach those small goals.
Before you know it, the small goals have grown, and our long term goal is within reach.
Smaller goal suggestions:
- Establish a pattern of savings beginning with a small amount each week. An emergency savings fund is the first focus you should have, as listed above, and so this could begin with a minimum amount and be built upon in time. Aim to have a $500-$1,000 in an emergency fund.
- Weekly or monthly small increment increases in your savings to help you adjust to the change in flexible income.
- Breaking down larger savings goals into multiple parts and creating short term goals so the large number doesn’t overwhelm. A $500 new washing machine goal can be broken down into 10 months of $50 savings.
Larger goal suggestions:
- Vacation goals, upgrades on appliances, remodeling or renovation budgets
- Retirement, college education for children, buying your dream home
- A new car, motorcycle, boat, or other splurge vehicle or “toy”
Navigating through the process of making savings goals for the New Year seems difficult, but it is not impossible.
These tips are just the beginning.
Start small and really figure out what you want to save for and then break it down so that you have easy to follow steps.
As you look at your long term desires and needs, you can break down your goals even more to make them manageable.
For first time budgets and savings plans, your goals could be just $10-$20 per month. Even these tiny changes throughout your budget can make a lasting impact in time.
What are your savings goals for the new year?