Saturday, January 8, 2011

Setting SMART Financal Goals

lJanuary is the month of making New Year's Resolutions. How do you want this year to be different from last year? One of the most popular topics for resolutions besides weight-loss is finance. Just thinking about your finances can be totally overwhelming. It's easy to say "I want to spend less" or "We should save more this year." But with as broad of parameters as those, no wonder we often lose motivation and fail at achieving these goals. We need to set SMART goals.
  • Specific- clear and well defined
  • Measurable- amounts, percentages, dates to accomplish
  • Attainable- realistic
  • Relevant- aligned with where you want your life to be headed
  • Time Bound- deadlines help keep you focused and also let you have a reason to celebrate!

I think January is the perfect time to reassess your financial situation and goals. Knowing how much money you have coming in verses going out is a good way to be able to tell how much you will be able to save or where you will be able to trim frivolous spending. In his book Financial Peace Revisited, Dave Ramsey advises writing down all expenses for 1 month. Every penny you spend. So that at the end of the month you will be able to see exactly where and how you are spending your money. That is a great option but I have one that works better.

My husband and I use a free online software from Mint.com. It is awesome. You just enter all your credit cards and bank account information and it keeps track of every transaction for you. I know that can sound a little scary with all the identity theft happening these days. I was wary at first but I researched and found it's been featured in Money magazine as well as many others as a safe and secure way to keep your finances in order. We've been using it for 2 years now and have never had a problem.

Not only will it track your spending for you. It also will help you set up a budget and notify you if you go over in a specific category. It will remind you when your credit cards payments are due so you can avoid those pesky late fees and will even help you set up automatic payments. You can set goals and it will measure your progress. And depending on your spending habits it will recommend ways to save. It recommends certain credit cards that will give you the best rewards for your situation.

The thing that makes it nice for goal setting is how it lays everything out visually for you. You can make pie charts or bar graphs to track your spending based off of previous months or see how much of your income goes to certain categories.

I love it and definitely recommend it to anyone who wants to get serious about controlling their finances.

What are some ways you have of keeping your finances in order?

2 comments:

  1. Great advice and thanks for the link, going to check it out. We are struggling with both the money resolution and the weight lose. Good luck to both of us.

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  2. Thanks. Mint.com is for sure an easy way to get on top of your money.

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