Like many people, there are lots of things I could be doing differently with my finances. And, with a new year under way, it’s tempting to list out all of those areas in which we feel we are falling short and attempt to fix them all at once.

This approach, while it can be satisfying for a few minutes while you are drawing up ambitious plans to complete right all that’s wrong with your money in a single year, is often doomed to failure. Most financial goals require multiple steps to complete, and require a great deal of planning. It’s no wonder that many consumers are disappointed and disheartened with their finances within a few weeks of a new year.

Instead of trying to reach several financial goals this year, narrow your focus. Pick your most important financial goal and work on that for the new year.

How to Set One Financial Goal for the New Year

The Advantage of One Financial Goal

Setting one financial goal can help you better focus your efforts. Not only will it provide you with a way to more realistically proceed with your finances, but it will also allow you to put in the effort it takes to truly change your approach altogether.

When you choose one financial goal, it’s also easier to break your efforts down into more manageable steps. You can create a plan that spreads out your timeline over the course of an entire year. Saying that you want to increase your retirement account contributions by 50 percent is one thing, but it’s not likely to happen immediately. Instead, you have the chance to step your efforts. Start by increasing your retirement savings by 5 percent one month. Then, you can increase by an additional 5 percent the next month. By the end of the year (or sooner) you will have met your goal. The increase is incremental and manageable, and you also set the stage to continue to increase your retirement contributions over time.

This approach can work no matter what your financial goal is. By breaking it down into small steps you can take each month, you are more likely to complete your goal, as well as turn your goal into a habit that lasts beyond the scope of a single year.

Choosing Your One Financial Goal

The hard part, of course, is choosing which one financial goal to focus on for the year. I could probably stand to increase my retirement account contributions, and it would make sense for me to do a couple of other things with my finances.

However, I’m not in danger of missing my retirement, and the other items on my financial to-do list aren’t pressing. Everything is more or less just fine. What concerns me more is that I’ve noticed consolidation in my sources of revenue. Certain clients in my freelance business account for a larger share of my work, and I am concerned about the fact that so much of my income is from providing content to others. This is the most pressing financial matter for me right now, so it’s the one I’ve chosen to focus on.

You can do the same when setting your own financial goal. Think about the most pressing financial matter in your life. Is it debt? Is your nest egg woefully small? Do you hate your job and wish to start your own business? Do you find yourself spending more money than you would like on things you don’t care about? Do you want to save up for a down payment on a house?

Sit down and really consider which financial goal would likely provide the biggest impact to your life right now. You can also consider which would have the biggest long-term impact, or which financial worry is providing the most stress in your life. Decide what goal would be most likely to help you find peace of mind and better your life altogether. Once you have that figured out, you can focus on that one goal. You can always choose another goal next year.

Break It Down

As soon as you have a goal, break it down into steps that will cover the entire year. Or, if you know you can reach the goal in six months, plan it out along those lines, and have a secondary goal waiting in the wings for the latter part of the year.

Write down the steps to reaching your chosen financial goal, mapping out the small tasks and milestones along the way. As you go through this exercise, you will be surprised at how manageable even a big goal can seem, and at the progress you can make with your finances.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.