Reflecting on the Year and Setting Financial Goals

Reflecting on the past year and setting financial goals acts as a powerful compass for your financial journey ahead. As the year draws to a close, it’s a natural time to reflect on the past twelve months and ask ourselves some important questions. We can learn so much from contemplating our progress (or lack of progress) over the past year, and it’s no secret that we are far more likely to achieve our goals if we actually take the time to write them down. In this article we will explore some powerful questions you can reflect on to learn from 2023, and how to effectively set financial goals for the year 2024.?

A helpful place to start is by reviewing the financial goals you set at the beginning of the year. Which of these did you achieve? Which of these did you not achieve? Celebrate the wins, whether big or small. Did you encounter setbacks? That’s okay; setbacks are often stepping stones to success. Understanding what worked and what didn’t can provide valuable insights for the road ahead. For example, perhaps the goals you did not achieve were not very realistic or specific enough. What can you learn and take forward with you into 2024?

Here are some questions to help guide you during your end of year reflection:

1. What is the most important financial goal I achieved this year?
2. Why was I able to achieve this?
3. What can I learn from any financial mistakes this year??
4. What bad financial habits did I have this year?
5. What worked in 2023 that you can continue in 2024?

Setting Goals in 2024

A great place to start is to review the goals you set at the start of 2023. Are there any goals you didn’t hit that you would like to reach in 2024? Write these down. One of the most powerful frameworks for setting goals is the SMART framework:

Be Specific?

When setting financial goals, specificity is key. Rather than a vague aim like "save more money," drill down into details. For instance, writing down something like “save ￡5,000 in an emergency fund by the end of the year” is specific and clear. This specificity also helps you feel connected to the goal.?

Measurable

Ensure your goals are measurable. This allows you to track your progress, which is so important for staying motivated and maximising your chances of completing your goals. For example, instead of “reduce debt,” set a measurable goal like “pay off ￡2,000 of credit card debt in the next six months.”

If possible, break this down even further. For example, in order to pay off ￡2,000 in credit card debt in the next six months you can aim to chip away at ￡333 per month. This also makes things feel more manageable.?

Achievable

While ambition is commendable, goals should be realistic. Assess your current financial situation and set objectives that challenge you but are attainable. For instance, if you're looking to invest, start with an amount that won't strain your budget.

Relevant

Your financial goals should align with your broader life objectives. For example, if homeownership is a long-term aspiration, saving for a down payment might be more relevant than, say, investing in high-risk shares.

Time-Bound

Set deadlines for your goals. Having a timeframe creates a sense of urgency and helps you stay focused. For example, instead of “start investing,” commit to something like “begin investing ￡200 per month starting January 1st.”

Setting Yourself Up for 2024

If you need some inspiration for your financial goals in 2024, here are some ideas of financial goals that will make a huge, positive difference to your financial wellbeing and future.

Boost Your Emergency Fund?

If you don’t already have one, establishing an emergency fund is a fundamental goal. Aim for three to six months' worth of living expenses. This financial cushion provides peace of mind and a buffer against unexpected expenses.

Clear High Interest Debt

High interest debt eats away at your wealth and has a negative impact on your financial wellbeing. If you have outstanding debts, prioritise a plan for repayment. Whether it’s credit card debt or student loans, chipping away at these financial obligations can alleviate stress and pave the way for increased financial freedom.

Automate Your Savings?

Automating your savings is a smart financial move that frees up time and allows you to save for the future on autopilot. It eliminates the risk of forgetting or neglecting to save, especially in the midst of a busy life. Moreover, automated savings capitalise on the principle of paying yourself first, ensuring that your financial goals take precedence over discretionary spending. Over time, this consistent and automated approach can lead to the accumulation of a robust financial safety net or contribute significantly to long-term goals such as buying a home, funding education, or building wealth for retirement.

Set a goal for how much you would love to save by the end of the year and create a way of tracking your progress month to month.?

Start Investing

The most important element of successful investing is time! The sooner you start, the better. If you’re not yet investing, then make it a goal to start in 2024!?

Diversify Your Investments

Review your investment portfolio and how well you are diversified. Diversification is one of the golden rules of investing and enables you to reduce investment risk. A well-rounded portfolio can include investment vehicles, such as stocks, bonds, and real estate. In 2024, which of these assets would you like to invest in and add to your portfolio?

Value Aligned Spending

The end of the year is an excellent opportunity to audit your spending and make sure that you are practising value aligned spending. This means spending in alignment with what you truly value in life and being aware when you are funnelling money into things that aren’t important to you. This simple change in your spending habits will make a huge difference overall.?

Conclusion?

As we embark on a new year, armed with insights from the past and aspirations for the future, may the lessons learned in the year gone by inform wise decisions and the goals set for the coming year be stepping stones toward your financial empowerment. Here's to navigating the financial terrain with intention, making each step count toward a more secure and fulfilling financial future. Cheers to a year ahead filled with smart financial moves and the realisation of your aspirations!

Key Takeaways?

• Reflecting on the past year and setting financial goals is essential for guiding one's financial journey.

• Reviewing achievements and setbacks from the previous year provides valuable insights for future progress.

• Key questions for reflection include identifying important financial goals achieved, learning from mistakes, and recognising effective habits.

• Using the SMART framework, (ensuring goals are specific, measurable, achievable, relevant, and time-Bound), makes goal setting more effective.

• Ideas for financial goals in 2024 include boosting the emergency fund, clearing high-interest debt, automating savings, starting investments, diversifying the investment portfolio, and practising value-aligned spending.