New Year’s Resolution: Set “SMART” Financial Goals

Dec 30, 2018

Happy New Year!

It is that time of year again! The time when millions of people make New Year’s resolutions in the hopes of sparking positive change.

If getting your financial life in order is part of this year’s resolution, the best way to do so is to set “SMART” financial goals.

A “SMART” goal is one that is specific, measurable, attainable, realistic and time-sensitive. Rather than “save more money,” a “SMART” goal might be to save an extra $5,000 for emergencies by the end of the year.

In my opinion, if you act “SMART”, reaching your financial goals will become easier.

For inspiration, the following are a couple “SMART” New Year’s resolution ideas.

Evaluate Your Budget

How much did you spend on your daily fancy cup of coffee last year? How much did you spend on monthly subscriptions like Netflix? How much did you spend on lottery tickets or bowling jackpots?

If you cannot answer any of these types of questions, it is probably time to create a budget or update your existing one.

A budget gives you visibility into your finances. This helps you plan out any saving, spending, or investing to reach your short-term and long-term goals. Therefore, reviewing your budget is a great resolution to start with.

In a previous article, I talk about the Strengths and Weaknesses of the 50/30/20 Budget.

Reinforce Emergency Savings

As part of the budgeting process, set aside some money each month to help build your emergency fund. Most financial advisors recommend that people save about 3-6 months’ worth of expenses in their bank account to cover any emergencies.

According to a survey by Bankrate, 1 in 4 Americans have no emergency savingsAdditionally, Bankrate finds that only 39% of Americans have enough to cover a $1,000 emergency. What makes this more alarming is that in the same survey, about 62% of Americans say that they are very satisfied or somewhat satisfied with their emergency reserves. This shows that there is a big disconnect between how people feel about their own financial well-being and reality.

Therefore, it is best to make sure you have enough to cover any emergency.

If you need to save more in emergency savings, I would make saving a weekly or monthly habit. This habit will help you build a healthy financial cushion.

Get out of Debt

If you have a significant amount of credit card or consumer debt, you should become laser-focused about paying it off. This is because interest rates on this type of debt are usually higher than auto, mortgage, or student loan debt.

Similar to how investment returns compound, interest on debt compounds too. Therefore, it is important to establish a plan to lower your amount of existing debt and prevent it from building up in the future.

Check Your Credit Score

If you plan to purchase a home, car, or take out a loan, it is a good time to check your credit score.

A good credit score is an important part of your financial health because it can unlock many savings and benefits. This includes access to loans and credit cards with the most favorable terms.

In a previous article, I talk about how a good credit score can save you thousands of dollars.

If you want to check your credit score, there are many free ways to access it.

Plan for Retirement  

It is never too early to start planning for retirement. You should consider contributing to your workplace retirement plan, especially if your employer offers a match. If your employer does not offer one, you can consider contributing to an IRA. By starting to contribute in these types of accounts today, you will have more than just a Social Security check in retirement.

In a previous article, I show the actual cost of waiting to invest from a mathematical perspective. 

Review Your Insurance Policies

If you have health, disability, long-term care, auto, homeowners, or life insurance, you should think about evaluating these polices. Think about if you are still happy with its premium, deductible, limits, and overall coverage. Additionally, you should consider another plan if your needs have changed over the year.


When it comes to dealing with your finances, setting New Year’s resolutions for yourself is easy. However, committing and following through with those resolutions can be extremely difficult.

In my opinion, a good financial advisor can make this ongoing process easier by facilitating positive behavior change.

If you work with a financial advisor, I would seek out a meeting with them after the New Year to discuss how you can make “SMART” financial decisions. 

If you are considering hiring a financial advisor in the future, I would seek out a Certified Financial Planner Professional.

Once you have an introductory meeting scheduled, I would consider some thought-provoking questions to ask at your first meeting.

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