Happy New Year, everyone! As is always the case, with the arrival of a new year comes a whole host of New Year’s Resolutions. We all do it – we’re going to get more sleep, eat better, lose weight, save money… and then by February, we’ve forgotten our resolutions completely. Here are some tips and a few challenges you might decide to try.
What is a SMART Goal?
This year, when making your resolutions, set SMART goals. SMART is an acronym designed to help provide structure to your goals. I first learned about them in a project management class, but I find they’re great to apply to life as well.
S – Specific
What is your goal? Sure, “save money” sounds great, but it’s not specific. Maybe it’s “save for a vacation” or “save for a new dishwasher” or “spend less money eating out.”
M – Measurable
Here’s where you can get into some specifics. How much money do you want or need to save? If you’re saving for a new dishwasher, figure out how much that will cost you – that’s the amount you need to save. If you want to spend less money eating out, look at what you spend now, and then decide how much less you want to spend. This element is critical. Because let’s be honest, if at the end of the year, you’ve spent $10 less on eating out than you did the previous year, you technically met your goal, but you didn’t really live up to the spirit of it.
A – Achievable
This is where I think a lot of New Year’s Resolutions fail. You have to make sure that what you’re trying to do can actually be done. Sure, I’d love to save enough to do all the house projects I have on my list, but it’s just not feasible, at least if I want to keep paying my bills and buying food and such. But I can save enough to replace my washer and dryer.
And remember, your goal doesn’t have to be a “complete” goal. What I mean by that is that you don’t have to save up for an entire thing. Maybe you’re working towards a big vacation in a few years. Your goal can simply be “Save $500 for vacation to France.”
If your goal isn’t achievable, it’s easy to give up. Think of all the people who say “This year, I’m going to lose 50 pounds.” Two months in, they’ve lost 4 pounds and they think “Well, I guess I can’t do it. So long, goal!”
R – Relevant
This one tends to apply more in business. Here, I like to make sure that the goal is important to me, because that helps me keep it a priority. Sometimes, this means reminding myself why the goal is important. “Yes, I know that putting money into an emergency fund isn’t exciting, but last year when the air conditioner broke, I was so glad I could afford the replacement.”
T – Time-Bound
When do you want to have this goal complete? A lot of us look at resolutions as a year-based thing, but you can set a shorter goal. Maybe you want to have something done by June. Maybe you want to do some shorter goals, like trying something for one month. These are all great ways to set goals.
Some Challenge Ideas
I’ve written a lot about different challenges you can take on. Some of these are longer, some are shorter. Take a look and see what works for you!
52 Week Reverse Savings Challenge – This is a great challenge to start if you received a bit of money at the holiday. You start by putting away $52 the first week, $51 the second week, and so on. By the end of the year, you’ll have nearly $1400.
The 30 Day Decluttering Challenge – If you’re not ready for a savings challenge, this one might be right for you. Start getting rid of stuff. You never know what you might find hiding in your home. You might find items to sell or things you forgot you owned and won’t need to buy again.
The Paper Money Savings Challenge – For this challenge, you pick a certain denomination of dollar bill and never spend it. Let’s say every time you get your hands on a $1, you put it in a jar or an envelope and don’t save it. Those dollars add up, and you likely won’t notice them missing from your wallet.
26 Week Savings Plan – Instead of saving every week for 52 weeks, in this plan, you save for 26 weeks, and end up with $351 at the end of the 26 weeks. If you’ve been struggling to save anything, consider using this plan. And if every week sounds too challenging, use this 26 week plan over the full year, putting away money every other week (perhaps with your bi-weekly paycheck?).
The 60 Day Money Challenge – If this seems overwhelming, try starting small, make small changes, and see where you’re ready to make a bigger commitment.
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.