Who’s ready to set financial goals for the coming year?

Reflection seems to be a staple this time of year as we look at our lives, and try to figure out how to make the coming year better than the last year. I can think of a few personal, health and financial items that would make my life a little bit better in the coming year. And probably even help my family live a little bit better!

Even if you don’t end up keeping your resolutions (did you accomplish everything you wanted to in 2011?), the act of looking at your life, as Flexo at Consumerism Commentary points out, is something worth engaging in. So, look at your financial life, and decide what you could do to make an improvement.

What if You Could Only Set One Goal?

One of the exercises that I have engaged in during recently rounds of financial goal setting is focusing on only one money goal at a time. Rather than listing out a whole bunch of things that I think would be nice to accomplish, I ask myself what the most important thing I can accomplish with my money is this year.

In the past, this has led to increasing monthly retirement contributions, working up to a level I’m happy with, paying down credit card debt, building up my emergency fund, and saving up for a down payment on a car. Once I’ve accomplished one goal, I can move on to the next — no matter the time of year.

Using a SMART framework for goal setting, I choose one important money goal to start with for each new year. If I accomplish the goal before the end of the year, I find another goal to work on. If I don’t quite reach my goal, well, at least I’ve still made good progress during the year.

As we begin moving into a new year, consider what you imagine to be your most important financial goal. What is the one thing that would help you feel a sense of accomplishment at its achievement? Think about your priorities and values. Start out the new year with a plan to accomplish this goal, and focus your financial efforts on that goal.

My Money Goal for the New Year

This year, my money goal for the new year is to pay down more of the principal on our home loan. My husband earned his Ph.D. in 2011 (w00t!) and is working as an adjunct. However, he is also applying for full-time positions. While we would like to stay where we are, you never know what is going to happen. Because of when we bought our home, and the fact that we bought in a new subdivision that still isn’t full, similar homes are selling for much less than we still owe on our home — no matter what the county is assessing our home’s value at for tax purposes.

We know that our home’s “worth”, in terms of what we can realistically expect to get for for it, is less than we owe on the home. So, if I want to be ready to move quickly and without trouble (I know I’m not cut out to be a landlord), we need to pay down our home’s principal as much as possible now. And, if we don’t end up moving, at least we’ve shortened our mortgage term.

That’s my #1 money goal for 2012. What’s your money goal for the coming new year?



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.