10 financial goals to set for yourself in 2018
Thinking about how you can rock your 2018 goals? Don’t forget to set financial ones, too!
Here are 10 smart financial goals to set this year:
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Create a budget so that you're in control of your money.
Budgeting may not be your favorite hobby, but it can help you spend less than you earn. With a budget, you can stop wondering where your money went and start thinking about where it will go.
Start by categorizing your spending. For example, you could create budget categories for food, rent, savings, going out with friends, Netflix, and so on. Next, look at your total monthly income and expenses. Using your after-tax income (or your “take-home pay”), allot a certain amount of money to different categories in your budget.
You may also want to think about the 50/30/20 rule, which we break down in how to stop spending and start saving.
Tip: Consider using tools like BMO Harris Total Look® to track your income and expenses.
Ditch debt for good.
You and debt have probably never really hit it off. Make a clean break by creating a payoff plan to get rid of that financial ball and chain.
First, make a list of all your loans and take note of each balance’s interest rate. Next, focus your efforts on paying the high interest debt first, so you’ll end up paying less total interest over time. Keep yourself motivated by coming up with some milestone rewards (like treating yourself to a fancy dessert after you’ve paid down your first $5k).
Put your savings strategy on auto-pilot.
Bigger is better when it comes to your savings account. But let’s face it, saving can seem hard. If you’ve ever felt like “I can’t afford to save” or “I’ll start saving next month,” we have the perfect trick for you: Automate your savings.
By setting up automatic transfers to your savings account from your checking account, you can put your savings strategy on auto-pilot and you’ll hardly even notice the money is gone. Start by automatically saving 10% of your income with each paycheck. You can typically set up automatic transfers online or by talking to your bank. Automating your savings can make the process easier and help you build wealth effortlessly.
Invest in yourself.
Want to know one of the best things to invest in? Yourself. It may bring returns on your happiness, success and even salary. Think about what new skills could beef up your resume, and look for learning opportunities in your community or online that could help you move your career forward.
Not only that, think about what you want to accomplish in the future. Do you want to pursue an MBA? Spruce up your design skills or master the art of coding? Become a better writer? Look into resources and classes at General Assembly, Coursera, Udemy and more. By investing in yourself, you can get a leg up in your career and become more well-rounded.
You might also like: How much do you really need to retire?
Save for a rainy day.
Haven’t given serious thought to saving yet? You’re not alone. Almost a quarter of Americans say they don’t have anything saved for an emergency fund.
Unexpected things happen to all of us, and creating a financial safety net can help ease the pain of tough times and help you rest easy during good ones. So if you ever need funds to get you through a bump in the road (knock on wood), you'll have savings to draw from to help you through it.
Tip: For a solid rainy day fund, aim to save three to six months’ worth of expenses in a high-yield savings account.
You might also like: How to start an emergency fund
Save for a goal just for you.
Dreaming of an Italian getaway? An adventure-filled trek through Thailand? Or maybe you want to upgrade your car or start your own business?
In 2018, don’t forget to save for your personal goals. After all, money is a tool to help you enjoy life. Saving for your goals can empower you to spend on what actually matters to you and avoid debt while pursuing your dreams.
What if you made an extra 25% in 2018? How would that change your financial life? Would it allow you to pay off debt or jump-start your retirement fund? Or how about reach some of those personal goals? Make it a goal to earn more money in 2018. You can do this in a variety of ways:
- Negotiate a raise at your job.
- Take on a side gig.
- Sell your old stuff.
Budgeting and saving are important parts of being financially responsible — but you can also focus on earning more to help you reach your financial goals.
Save for future you.
You may not have invested in wrinkle cream or colored your hair yet, but it’s never too early to start saving for the future. Why? Because you have one secret weapon to jump-start your retirement: Time. The magic of compounding interest can turn just a little bit of savings into a large nest egg.
To rock this goal, strive for saving 10% to 15% for retirement through your employer-sponsored 401(k). If you’re eligible, make sure you contribute enough to get a company match, at least! It’s free money and a sweet job perk. Also, consider getting extra tax benefits by contributing to a Traditional or Roth IRA.
Tip: In 2018, you can contribute up to $18,500 in a 401(k) and a total of $5,500 in an Individual Retirement Plan (IRA). Just be aware of potential income restrictions and contribution limits1.
If you work for yourself, you might want to check out retirement plans for self-employed people. Options like a SEP-IRA can help you save for retirement on a tax-deferred basis, just like employees on company plans.
Educate yourself about personal finance.
Knowledge is power. In 2018, commit to educating yourself about money and personal finance. Learn about the many options available to you when it comes to saving for the future. Novice savers can become savvy wealth-builders with just a bit of training.
Consider curling up with a book to start learning more about personal finance; get started with this list of the most important finance books from Business Insider. Your future self and nest egg will thank you.
You might also like: CDs vs. Money Market Accounts: Which one should you choose?
Sit down with a financial advisor.
Still not sure where to start on your 2018 financial strategy? Consider sitting down with a financial advisor.
By taking a look at your entire financial situation, they can help you establish a customized plan designed to meet your short- and long-term goals. Then, your financial advisor can help you select suitable products and services designed to put your plan into action. (Our friends over at BMO Harris Financial Advisors* may be able to help.)
In 2018, commit to making your finances a priority and set financial goals for yourself. You got this!
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"Almost a quarter of Americans say they don't have anything saved for an emergency fund."
"Saving for your goals can empower you to spend on what actually matters to you."
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1BMO Harris Bank and its affiliates do not provide legal or tax advice to clients. You should review your particular circumstances with your independent legal and tax advisors.
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*Securities, investment advisory services and insurance products are offered through BMO Harris Financial Advisors, Inc. Member FINRA/SIPC. SEC-registered investment adviser. BMO Harris Financial Advisors, Inc. and BMO Harris Bank N.A. are affiliated companies. Securities and insurance products offered are: NOT FDIC INSURED – NOT BANK GUARANTEED – NOT A DEPOSIT – MAY LOSE VALUE.
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