While any time of year is a good time to review your finances, come up with financial goals, and start a budget, I always like making some financial resolutions or goals for the entire upcoming year and implementing them starting on January 1st.
Typically I’ll start working on my next year’s financial plan and budget several months in advance. But before I actually make a budget or do anything else, I first start by deciding on my financial goals for the new year.
Why do I start with my goals before my budget?
The best way to get to where you want to go, is to know exactly where it is you want to go in the first place. Makes sense right?
By setting my goals first I’m better able to review my finances and create a budget that will help me meet those goals.
I do this by looking at my current finances – what I’ve been earning, what I’ve been spending, how much I have in my savings and investment accounts etc. I also review my financial goals from the previous years – did I meet my goals? Exceed them? And then I decide where I want to grow financially in the upcoming year and years to come (both short-term & long-term financial goals).
Start early
By working on my next year’s financial goals and resolutions a couple months or so before the new year I have plenty of time to review everything that’s been going on in the current year, set some goals, and then revisit the goals throughout the coming months and make adjustments where necessary. It also gives me time to write everything down and create new spreadsheets for tracking my progress etc (the main way I track everything).
Contemplate goals
I’ve got some BIG goals going on for 2025. I’ve been contemplating a career change and am working on some continuous personal improvement projects (taking classes, attending seminars, getting certifications etc) as well as some home improvement activities that are going to require some hefty budgeting and funds. I would like to pay off some debt (from new car purchased late 2023) and increase my savings and retirement accounts (typically one of my main focuses).
How is this year different?
One thing to think about is how is this year going to be different from other years? Your financial goals probably won’t be the same from year-to-year, mine typically aren’t.
Personally, I am a heavy investor. I tend to keep my main checking account lean and the majority of my income goes towards financial goals involving savings, certs, investments, and various retirement accounts. All of which are accounts where I stash money, and plan to leave it untouched for the long-term.
But for 2025 I have quite a few activities planned that will require more funds than I usually allow to sit in my bank account.. I would also like to accomplish this by not sacrificing what I usually contribute to my savings and investments.
Think about how to accomplish goals
So, how should I go about doing so? If the majority of what I earn typically goes into savings, but I need more funds in my bank account to afford some extra needs for the year – the answer is clearly going to be – budgeting <3
But in order to properly budget for what I need without diminishing my savings goals, I’m also going to include two other aspects within my budget goals and that’s to 1) increase my income and 2) decrease my expenses.
Sounds pretty simple right?
