4 Tips to Setting Smart Financial Goals – No Matter Where You Are Financially

As the global pandemic presses on into the new year, you may find yourself feeling a bit hopeless about setting financial goals for 2021. Will the economy tank? What will happen with student loans? Will there be any financial relief?

Unfortunately, my Magic 8-Ball hasn’t been accurate since the 3^rd grade, but having so many unknowns in the near future doesn’t mean we have to wait to set or make progress towards our money goals. In fact, having something like a financial goal, where you can measure and manage it regularly, may just bring back a sense of control into your everyday life.

No matter where you landed financially in 2020, here are some tips on how to set (or shift) your financial goals going into 2021.

Tip #1: Take audit of your money.

Just like ripping off a Band-Aid, the thought of looking at your current financial situation might seem like it’s going to be super painful. Even peeling back that first corner feels nearly impossible. But there is also that sense of relief, breathability, and “Hey, that wasn’t so bad,” once it’s all said and done.

When my clients and I take audit of their money, we look at two key things:

• Net Worth (i.e. We take stock of what they own and what they owe.)
• Current Operating Budget (i.e. How much they make in a month and how much they spend in a month.)

This gives us a starting point, and it’s vital to setting financial goals and then making a plan to reach them. After all, how can you get the proper directions to your end destination if you don’t know where you’re starting from? Identify your current location by taking audit of your money.

Tip #2: The Power of ONE Goal

I know, you want to pay off debt and have a juicy emergency savings account, plus a few extra thousand in your retirement by the end of the year. As much as I love to help my clients tackle multiple goals at once, it’s not always the most appropriate plan of action with so much uncertainty and financial constraint at play.

If finances feel tight, you feel overwhelmed, and knowing what to focus on seems nearly impossible, then let me share with you my favorite coaching analogy: Put your energy and your money through a funnel, not through a strainer.

How do you do that? Pick ONE money goal from one of the below categories to focus on until you’ve accomplished it:

1. Debt Reduction (pick one debt to reduce)
2. Savings (pick one savings goal to achieve)
3. Investing (pick one longer-term savings goal where you’ll use investing to help you get there)

By focusing on ONE goal from ONE of the three financial goals categories, you’ll reduce any conflicting money priorities, be able to better focus your energy on the one goal, and increase the effectiveness of every excess dollar you find in your budget.

Tip #3: The Power of ONE Plan

Good news! There are so many ways to reach your ONE money goal, but doing too much, too fast can and will lead to money goal burnout. The fail-proof way to work toward a financial goal, especially during uncertain times, is slow, sustainable, progress – not a crash diet.

To do that, you need to put a plan in place that will work for you. That’s why I suggest to pick one plan and act on it for 90 days to pursue your goal. If, after that three-month period, you’re ready to turn it up a notch, layer on another plan of action.

So, what’s the plan? Well, in order to achieve most money goals, you need to have some excess cash to route toward your goal. There are a few different ways to gather up that excess cash (but remember, just pick ONE to start):

1. Take the excess cash that you’re putting through a strainer into multiple money goals, and compile it all through a funnel to your ONE money goal.
2. Reduce spending by canceling, swapping, or negotiating down current expenses, then reroute that excess cash toward your ONE goal.
3. Increase income through side hustles or other out-of-the-box ways to bring in excess cash, and … you guessed it, send it straight to your ONE goal.

Tip #4: Measure your inches, not just the miles.

In a world where instant-gratification is baked into everyday life, it’s no wonder why so many give up on their financial goals early on in the process.

Not only does it take time to see meaningful financial results, but we’re also increasingly programmed to only celebrate the wins in bigger quantities (i.e. the thousands, 5-figures, and beyond).

A mentor of mine always used to say, “Whether you move an inch or a mile, the point is that you’re moving forward.”

This is why it’s so important to measure and celebrate your daily and weekly successes­ – in inches, not miles – so you can stay focused on the fact that you’re making progress toward the end goal.

No matter what you were or weren’t able to achieve in 2020, know that it’s possible for you to make progress toward your goals in 2021. I love my Ally Bank Online Savings Account because it offers fantastic tools to help me put a plan of action in place. I like the buckets tool to organize my goals and visualize what I’m saving for. Also, boosters help me set aside spare change, while recurring transfers keeps my goals funded on autopilot. Know where you’re starting from, identify your ONE final destination, begin with ONE plan of action, measure even the smallest of successes, and celebrate them.

For more on getting your savings organized, visit ally.com. Want to learn more about how you can turn your obsession for optimizing your own personal finances into a money coaching business? Check out my website wanderwealthy.com.

Tess Wicks is the founder of and voice behind Wander Wealthy, a podcast and YouTube channel for millennial women who want to make smart and savvy financial decisions. She is a wealth and mindset coach, who provides tools and education for online coaches and service-based entrepreneurs.