It’s coming up fast, my friends. As of the date of this post, we have exactly twenty days until the new year begins. So I wanted to share some thoughts on how to set goals for 2017. All data shows that S.M.A.R.T goals (S = Specific, M = Measurable, A = Action-oriented, R = Realistic, T = Time-based) goals have a much higher rate of success than non-SMART goals. So when you’re setting your year’s goals, make sure to use those standards.
For instance, don’t just say “I want to have less debt in 2017.” Say, “I’m going to reduce my debt load by $10,000 in 2017 and I’m going to do that by paying $833 a month in principal payments toward debt. I’m going to find the money by cutting cable ($80 a month) switching my cell phone service to a cheaper plan ($30 a month) and cutting grocery costs by twenty percent ($100 a month) in addition to the payments I’m already making.
The goal is to give yourself a step-by-step, action-oriented plan for, at the minimum, reaching your goals, and at the maximum, surpassing your goals.
But that’s not what this post is about. I wanted to talk instead about specific areas of your life that you might want to consider as you set your goals. When you set your goals for 2017, think about the things that will help you put your life on a trajectory toward success.
Your Debt Load
My advice? Dump it ASAP. All of it. Unless you’re sitting at a DTI (total of monthly payments on debt divided by gross monthly income) of ten percent or less, get rid of it quickly. The sooner you owe no one, the better place you’ll be in if some kind of global or local economic mess hits.
Your Retirement Monies
According to this Marketwatch article, roughly 43% of working household have ZERO saved for retirement, and the median couple nearing retirement has an average of $17,000 in retirement monies.
With 76% of Americans living paycheck-to-paycheck, I get that it’s tough to save for retirement. But what about committing to putting even 1%, 2% or 5% toward retirement savings each paycheck?
If you’re already saving, take the time to assess what you’ve saved so far, what your projected total retirement savings will be by the time you retire, and what, if any, adjustments need to be made to your current savings plan to help you reach or exceed the amount of money you think you’ll need by the time you retire.
It’s important when calculating what you think you’ll need per month in retirement income too to add in monies for inflation and unexpected costs. Always better to overestimate than underestimate in this area.
Your Emergency Fund
3-6 months’ worth of expenses is ideal, twelve months’ worth is optimal, but even if you only have two weeks worth of expenses saved in your emergency fund, it’s better than nothing. Also, remember that stockpiling can count as emergency savings in some instances because it lessens the amount of money you’ll need to spend in a given month on food and personal items should a disaster hit.
Again, if you’re having trouble saving for your emergency fund, start with 1% of each paycheck. One percent is doable even for the tightest of budgets (think about whether or not you waste one percent of your income on stupid stuff). If saving one percent is working out well, up it to two percent for a few weeks and see how that goes, committing to increasing if necessary in order to get that emergency fund fully funded.
Your Annual Medical Needs
Personally, I’m a fan of HSAs because they’re transferable year after year, and they’re usually tax-deductible. As you are making your 2017 goals, start thinking about how you can maximize savings and tax deductions as you pay for upcoming expenses. For instance, we have a kid who is getting braces in 2017, so we’ve situated our HSA contributions in a way that will allow all of our out-of-pocket expenses for the braces to be deducted on our 2017 tax return.
This IRS publication shares which medical and dental expenses qualify for HSA fund usage. You might be surprised to read that things like acupuncture, bandages, and certain home improvements (such as adding grab bars for safety and widening door ways for wheel chair access) can be paid for with HSA funds.
Also, HSAs can make a valuable addition to your retirement savings plan, as the funds can be used to pay for medical expenses during retirement. Just make sure you’re adhering to the IRS maximum contribution guidelines as you plan? Check out this article for the most recent HSA contribution numbers.
I’m a big believer in creating a monthly and yearly budget that helps me project what we’ll spend in the upcoming year. We also track every bit of our spending each year so that we can continually be on the lookout for ways that we’re leaking money and then plug up that leak. As you think about your 2017 goals, make a plan for what you’ll spend ahead of time in order to get a handle on the “black hole spending” that ruins so many people financially.
Your Life Goals
Life isn’t just about money. Make sure to take some time at the end of the year here to figure out what your goals are for the rest of your life. For instance, you could plan in the areas of:
- family relationships
- home improvements
- friend relationships
- charitable work
- eating habits
and more. Take the time to assess where you’re at in life and think of ways you can make 2017 your best year yet.
Have you thought about your 2017 goals? What are your top three?