Set Money Goals for the New Year + New Year’s Challenge

New Year is one of my favorite times of the year. It’s finally cold in Texas (kind of) and the spirit of self-improvement is pervasive. It’s the perfect time to start thinking about money goals!

That means it’s also the perfect time to ask, why should we set money goals? How can we figure out what it is we should be aiming for? And how can we actually stick to our money goals past Jan 22nd? 

Before we dive into these important topics, I want to give y’all a quick update. It’s been almost 5-years since I got out of debt.

In my first blog post, I detailed how I went from 240k in debt (including a mortgage) to $0 net worth. If I had paid the minimums on my loans I wouldn’t be out of debt until 2023 (!!!). Looking back on the past 5-years I am thankful I paid them off and began my saving and investing journey. 

Since I got out of debt in May of 2017, I’ve been able to increase my net worth considerably. I have a single household income that is less than $100k a year and I pay child support. Despite that I was still able to grow my net worth because of a few key factors.

For one, the stock market has increased quite a lot over the past 5-years. Naturally, this has played a large role. Second, I began taking action as soon as possible. Third, I’ve been consistent in taking action for 5-years now. Finally, I spent a lot less than I earned. I was able to do this because I had specific, actionable money

goals to work towards. I was motivated, determined, and disciplined. 

Action + Consistency = Success. Or, more colloquially one might say, Step 1: Crush it, Step 2: Repeat Step 1. 

It’s really that simple. Simple isn’t easy, though. Now, I can’t control the market but I can control my actions and how often I take action. But, before I could take action, I had to have an aim. 

This is where setting goals for your money come into play. 

There’s never a better time to start setting money goals and working towards a better future than today. The New Year is a great time to take advantage of the collective energy and positive mindset pervasive in our society right now.

Why Set Money Goals?

Imagine for a second that you didn’t have any specific, actionable goals for your money. What would happen to it? If you make a lot of it, this might not be a big deal. For me, I would sock away some here and there, then spend the rest as I please – with no intentionality. 

You have to know the destination before setting out on the journey. 

Without specific goals for your money, we tend to flounder. In archery the bullseye is the most valuable shot placement, but you still get points for hitting around the bullseye. 

It’s quite a good analogy to money. If you have a specific, actionable money goal, you’re more likely to meet that goal. And if you don’t hit it, landing somewhere around it is better than the alternative. 

Remember that you are the sum of all your actions. Therefore, it’s imperative to do your best to make the most optimal choices throughout life. You’ll never be perfect but there’s always room for improvement.

I believe that intentionality is key to living a fulfilling life. We must find ways to live intentionally, even with money. 

Saving up for things and life events is the responsible thing to do as well. Delayed gratification is a virtue. I’m not a fan of winging it when it comes to money. Being financially secure and good with money is a sign of maturity. 

Plus, being “good with money” seems difficult, but it’s actually quite easy. If you follow what’s laid out here you’re going to gain a lot of confidence and clarity around money. 

Coming Up With The Right Money Goals

Let’s talk through a few exercises. This will help clarify what it is you’re looking to accomplish and give you a solid starting point. 

Read through all these before taking action. At the end, I’ll give you the exact action items to take through the New Year’s Challenge. 

Our objective is to create specific, actionable goals for our money. 

We are going to craft a few of those, then break them down into specific, actionable micro-goals you can start working on today!

Know Thyself

Before we set any goals for our money, let’s make sure we know the answers to a few questions. Use these two questions as journal prompts. 

“What do I value?”

“What is my why?”

By understanding your values, you can accurately fit your money goals to your aspirations. 

For example, if I value being debt-free but I am in debt, then my goal is clear. If I value having a career I love and to be self-employed but I am in a career working for someone else that I don’t like – my path forward is clear. 

I value financial security and freedom. For me this means being debt-free. I am okay with taking on a mortgage but I haven’t done so in recent times. It also means aggressively increasing my savings rate and investing so I can be financially independent at an early age. This gives me flexibility with where I work and what I do with my time – for me this is the most valuable part of having more money.

My “why” was the birth of my son. That catapulted me into a different mindset of maturity around money and made me question a lot about my lifestyle.

Finding your “why” to why you want these money goals accomplished will help when the going gets tough. And it will get tough – fair warning!

Positive Visualizations

I want you to think of two scenarios. One short-term, one long-term. 

For the short-term, think 1 year out. What kind of person do you want to be in 1-year? What kind of financial situation do you want to be in within a year? 

For the long-term, think 20-years out or longer. What kind of person do you want to be in this time frame? What does your career and family look like now? 

Start thinking of the actions  you’ll need to begin taking now to get to these places in life – specifically with enough money to do what you want to do.

Negative Visualizations

Now let’s do the opposite of the above. Those were best case scenarios. 

What happens when it’s Jan 1 of the next year and you haven’t changed at all? Or alternatively, you’ve digressed? 

Journal about how this feels. For me, this was a powerful exercise and one that scared me into action.

Know Your Starting Point

I advocate for everyone to start by calculating their net worth. This gives you a jumping off point. It will tell you exactly how deep into the red (debt) you are. Or, it’ll shed some light on how much more you need to go.

I have a detailed post on Net Worth on my blog, so I’ll let you read that to get an in-depth understanding. 

At a high-level, your net worth is everything you own minus everything you owe. It’s a good starting point and gives you a high-level view of your money situation. 

Here is an example of a very simple net worth calculation you can make in your Bullet Journal. 

You can also have fun with it by making the numbers visual. This is what I did originally in my Bullet Journal when I was in debt. Now, I track these in a spreadsheet. I’m still not a huge fan of the common apps that track for you. 

Know Where Your Money is Currently Going

Next, create a simple budget. This will tell you exactly where each paycheck should go. 

Here is an example of an extremely simple budget you can replicate in your Bullet Journal.

The budget is your roadmap to where your money should ideally go after you’re paid. Ideally, you’d follow the budget exactly. 

However, reality doesn’t always meet expectations. This is why you need to track your spending. 

Here is a straightforward way to track your spending in your Bullet Journal.

It doesn’t get any more simple than this. Yet the payoff for doing this is HUGE. 

Tracking your spending is a powerful habit to build. I gained a lot of confidence around money once I began doing these few simple things I’ve mentioned above. The best part is that it only takes a few minutes a week to do. The benefit is very large compared to the cost of your effort. 

You’re now well on your way to becoming “good with money”. Being in control of your money is empowering!

Set Your Goals for your Money

You’ve become more familiar with yourself, learned about what it is you value and why, have a clearer vision laid out for your life, know your net worth, and have a budget. Now you’re ready to actually set some goals. 

By now you probably have an idea of what needs to be done. It’s usually pretty obvious. If not, track your spending for a few weeks and see if anything sticks out to you. Maybe you already have good habits around money. In that case, your focus can be on increasing your income. If you’re still unsure, jot down a few ideas a day until the right ones speak to you.

I would start by picking one to three money goals. Be as specific as possible. At a high level, I have…

• one short-term goal (current goal: saving for our wedding – 6 months out)
• medium-term goals I haven’t started saving for yet, soon to become my next short-term goal, post wedding (a new car, down payment for a house, children’s education)
• one longer-term goal (my financial independence/retirement goal )

Each of these goals takes into account my dreams, goals, and life aspirations that I’ve been working through in my journaling practice for the past few years.  

A few thoughts:

• Consumer debt should be paid off first (credit cards). Generally, the higher the interest the quicker it ought to be paid off.
• Get a feel for your comfort level with debt – many are okay with a mortgage, some are okay with student loans, but most aren’t okay at all with consumer debt. 
• If you’re out of debt, I’d recommend a cash emergency fund be a priority (post on this coming soon). Three to six months of expenses is a good starting point – easy to calculate now that you have a budget.
• Don’t be afraid of investing. Keep it simple and do your research. If you hire someone to manage your money, fee-only advisors tend to have a better reputation and aren’t trying to sell you products.

Work Backwards, From Future to Today

Once you feel good about your goals, it’s time to break them down into actionable steps. Begin by working backwards or going even further into detail if need be. 

The closer you can get to a daily action the better. For some, that is not possible. For those, strive for a weekly or monthly action, i.e. setting some money aside from a paycheck for retirement (auto-withdrawn from paycheck = putting your investing on auto-pilot). 

Many times it simply comes down to taking the total you need and dividing it by how much you can manage a month or how much time you want to spend saving and seeing if that number is realistic. 

If your goal is to save more by cutting back on spending, you’ll find examples below that will help with daily actions. When I was first starting out, my initial goal was to get my spending in check. I figured I had to do this before I could start optimizing my cash flow. Controlling my spending impulses was a daily struggle!

Other Examples

Above we talked about actually setting the goal and then breaking it down. Here are some detailed examples from my life that might help. 

My Retirement

My retirement goal number is over one million dollars. I came up with this number by taking my annual spending times 25. This is formally known as the 4% rule. Now, the most realistic way for me to get there is to consistently invest my money, as saving only cash would realistically take way too long. 

I began to research how much I’d need to invest from each paycheck to get to my number. I used a simple compound interest calculator to do this (I used a conservative return of 5%-7%). 

Here were my initial inputs:

And here’s what it gave me: 

I played with the “monthly contribution” input on the calculator to see how much it would take a month for me to get to my goal quicker. Then I began to see what I could cut back on and how I could increase my income in order to maximize this number. Note: I’d end up with ~$600,000 if I held this in cash alone – that’s just over half what I’d get if I invested!

I picked a number eventually that provided a balance between retiring before I’m 50 but also wasn’t using all my money every month. Having your company contribute to your retirement through a 401k match, HSA match, or a pension can be very helpful in getting you to your number a lot quicker (this is factored into the total monthly contribution above). 

Cara’s Car Loan

My fiance took on a $10,000 car loan in her sophomore year of college. She made this tracker in her BuJo to help her visualize the payoff. She said it really helped to keep her motivated and it was very satisfying coloring in each square (especially the last one!). Simple but effective.

Wedding

Money is one of the top topics that divide couples. When approaching marriage, we sat down and first aligned our goals, visions, and dreams. Just like I had you do before, we first had to come to mutual grounds on what we valued as a couple. 

Once here, we began to list out every single thing we’d need for a wedding (it’s a lot). Then we began getting specific by doing a lot of research on each item. We also made a list of every person we wanted to invite, since headcount at a wedding is very important. 

After a few weeks of research we landed at our final number. From there, we took that number and divided it by the number of months left until the wedding. A lot of wedding vendors have you pay in advance but some you pay just before or so. Timing can be tricky but for a general rule we divided it by the number of months until the wedding. This gave us a clear, actionable goal to save towards each month. 

Sticking to Your Goals

Now you’ve got your goals, your reason for doing them, and a clear path forward. Should be all set to crush those goals, right?! Did you know most people will give up on their New Year’s Resolutions by the second week of January? 

Let’s change that. Sticking to your goals doesn’t have to be difficult if you can find a strategy that works for you. 

Below are a few strategies I’ve used with a lot of success. These line up nicely with my previous post on how to stick to your budget. Same principles, slightly different application.

Understand: Consistent Action is Key

Remember earlier I said how I don’t like to wing it with money? For me it’s all about the formula I laid out at the beginning: Action + Consistency = Success. 

For me, understanding this makes the rest of my actions a lot easier. It takes the guesswork out of everything and now there’s no winging it. I have a plan and I know what I need to do to be successful. I keep this at the front of my mind as I make my way down the path. 

Habits and lifestyle changes take time to build, but they’re very much worth the effort. These all require trade-offs in life and that can be quite tough, but a necessary part of your personal growth. 

Self-Reflection

Providing yourself with a feedback loop is powerful. Whether this is from a mentor or from your personal journaling practice, make sure you’re getting consistent feedback. 

For me this is as simple as writing down what went well and what didn’t go well each day. This gives me instant feedback on my day and allows my mind to search for ways to continuously improve. 

I also write down a few small things I want to accomplish each month under my habit tracker. Then at the end of each month, I do the same review of what went well/didn’t go well. 

Habit Trackers

Habit trackers in your Bullet Journal are a powerful tool for cultivating consistency. Write out the habits you want to build. Check off the box if you do it daily. This works best for daily habits but can be adapted for others.

Here is an example of a simple monthly habit tracker from my old Bullet Journal. Note: I was trying to not smoke, not drink alcohol, and not buy coffee on this tracker, in case that wasn’t clear. 

No Spend Days

See how many days within a month you can go without spending anything at all. Necessities don’t count here. When I need a kick-in-the-butt, I revert back to strategies like trying no spend days and weekly challenges where I pinpoint a weakness to work on. For example, I may want to cut back on alcohol or going out to eat, so for a week, I’ll do my best to cut those out and get the right habits going. It’s a good way to kickstart new, healthy habits. This strategy combines well with the habit tracker, too.

Win Streaks

To progress you have to take action. To be effective you must take action consistently. Tracking your streaks of consistency is a great way to stay disciplined when the going gets tough. 

I write out a daily to-do list that I call my “power list”. If I am able to cross those all off, I get a “W” for that day. I find it extremely compelling to keep that streak going. You can use your habit tracker to track Wins too as I did above.

At first it’s hard to really get it going, but eventually, you’ll be hitting hundreds of days in your streak and the difference made in your life will be very noticeable. What will your life look like if you were to hit a 500 day streak of crushing it daily? It’s possible and it will turn you into a new person – the person who you visualized about earlier. 

The challenges I mentioned above help quite a bit. That’s why I’m issuing you a challenge for the New Year. 

New Year’s Money Challenge

Let’s start the New Year off right! Nothing kick starts your money habits better than a good old fashioned challenge. Join us over in the Just Stop Spending Community today. I’ll be posting about my experiences and answering any questions anyone has throughout the month. 

The rules are as follows, for the 31 days of January:

• Journal daily
  • Try the practices above, plus general journaling
  • At the end of each day, ask yourself what you did well and what you could’ve done better
• Calculate your net worth
• Create a budget
• Come up with at least 1 goal (and break it down)
• Track all spending, every day
• Do 1 of the following: create a habit tracker or complete a weekly challenge (e.g. no alcohol for a week)

It’s a lot but think of the change you could see from just 4 weeks of following what’s laid out above. 

Make sure you keep us updated with your progress! Being part of a community and sharing your experience can be very helpful. 

Remember, money isn’t everything in life. However, being good with money can make aspects of life a lot easier and less stressful. At the end of the day, money is a tool. It can buy us security, experiences, things, and freedom. Becoming rich is a consequence of your actions. 

I wish y’all the best of luck on your financial journey. I hope the advice from this post has helped show you a path forward for your journey. Remember to put what you learned into action and live the life you choose to live. Next December 31st, I want you to be a better version of yourself than you are today. 

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I look forward to speaking with you and helping guide you down this life changing path.

In health and in wealth,

Seth