New year inspires many us to set new goals and habits. Some people want a better relationship, good health or improve financial conditions. However, according to a research conducted by the University of Scranton in the United States, only 8% of people achieve their new year goals. The other 92% usually fails.
Nonetheless, in this article, I want to share with you the four principles that will help you achieve your new year financial goals. The four steps will help you to improve your financial conditions in 2018 and beyond.
They are the principle of where, what, how and act. You need to know where you are, what you want, how you will get and act on the “how”.
Step 1. Self-assessment
Do you know your financial net worth as at 31 Dec 2017? Do you know how we spent your 2017 incomes?
Experts have discovered that you cannot improve upon what you do not measure. Therefore, your first step towards achieving your new year financial goals is to assess your current financial condition.
You should assess your financial net worth by comparing your financial assets such as savings and investments to the liabilities like loans.
Self-assessment also requires you to look at your sources of income and how you spend your money. These two assessment tools will help you learn about your lifestyle and wealth creation efforts.
This step helps you to determine the essential priorities in your financial life. For example, a person with expensive debts should consider paying off before investing in low return investments.
Step 2. Set your financial goals
The second step is to state what you want. At this stage, you need to define the specific new year financial goals you aim to achieve during the year or beyond.
Your goals should be specific and precise. Instead of writing, “I want to save more money “, set a clear goal like “I will save D20,000 by 31 Dec 2018”.
Most people also fail at the step as they set too many goals. The consensus among expert is that for change to work, we must approach it in small numbers. Therefore, it is better to focus on two key goals than setting 10 financial goals that will not be achieved during the period.
Goals can even be more powerful and motivational if they are related to your personal desires and values. Imagine if your reason to save D20,000 in 2018 is to start your MBA course or start a small business.
Do you feel like giving up? First, think about the reason why you started to pursue that goal.
Step 3. Prepare your action plan
Setting your goals is never enough if there is no deliberate action plan to achieve such goals. A goal without an action plan is a dream.
Your action plan should outline the list of all the major tasks and activities that will help you to achieve your goals. If you want to pay off some debts, then clearly state how you will do it.
Nonetheless, for most people, our action plans will fall into four categories:
- Do more of something e.g. save part of your earnings
- Do less of something e.g. impulsive buying
- Start something new e.g investing excess cash
- Stop something bad e.g taking consumer loans
Your action plan should be reasonable and be ready to change.
“To achieve something you have never achieved before, you will have to do something you have never done before “ – (Brian Tracy)
Step 4. Execute and monitor
You can set well-defined goals and action plan; however, nothing will ever work if you do not take action.
You need to act on your action plan. You must be discipline and ignore distractions. In life, we can only achieve our goals through sacrifices.
The most common reason people fail in life is not lack of dreams or goals but failure to take action. It is similar differences between successful and less successful people.
So, if you want to achieve better financial freedom in New Year and beyond, you must start to act now. It’s never too late to do something. You simply have to assess where you are, list what you want, set out the tasks that will get you there and start to act.
What are your New year financial goals and how do you think I can help?