How to set financial goals for the new year

Maybe 2023 was an incredible year for you. You got a big promotion, successfully launched your side hustle, ran a marathon or made it through your 19th re-watch of The Office. Those are some big achievements. 

Or maybe it wasn’t such a great year. You lost a job or a relationship, had to give up your Netflix account after your old roommate changed the password, or maybe spent a little too much on those pesky credit cards 🙃

Whatever the previous year had in store for you, that magical strike of midnight on December 31st provides everyone with the opportunity to start again, or to double down on what worked in the previous year.

For a lot of people, that comes down to money. Making more of it, spending less of it and just generally ‘being better with it.’ The problem with ‘being better with money’ as a goal or an objective is that it means absolutely nothing. It’s like saying you want to ‘be healthier.’ Lovely sentiment, but doesn’t get down to the issue you’re really trying to solve.

So if you want to improve your financial situation next year, how do you really set financial goals? Read on, Cleo’s got you covered 💁‍♀️

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Big picture

Really the first thing you need to do is to get clear on what it is you want to change next year. What specifically did you feel was bad about your financial situation, and where is the end result you want to get to? One of the best ways to do this is to ✨visualize✨

Oh yes, we’re talking mood boards and Pinterest, if that’s your style. A plain old list in your phone or an old-school notebook is fine too, or just keep it all in your head if you like. Whichever method you choose, the whole point is to create a clear vision of what you want your financial life to look like.

Here’s an example:

1. I have paid off my credit card and clear the balance every month
2. I am able to go on a vacation to Mexico and I can relax and enjoy it because I’ve not used debt to pay for it
3. I am making progress towards a security deposit on an apartment 
4.  I am confident and relaxed in my day to day life as I know have money to pay for emergencies

This needs to be personal to you. Maybe you’re saving to go back to school, maybe you’re putting money aside to launch a new business. Whatever your thing is, picture what it is that you want money to help you do. 

Because remember, that’s all money is, a tool to help you live your ideal life. Yeh, Cleo can get deep 💅

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Little steps

Right, we’ve made a good start, but so far we just have some pins or vague dreams written in a notes app. That’s not going to get you very far without practical action towards achieving them. So with a big picture laid out, you need to break it down into the small steps you need to take in order to reach your objectives.

We need to turn all that ‘mood’ into cold, hard cash. 

1. Hit the books and research 👩‍🏫

Firstly, you need to research and work out how much it’s going to cost you to do all these things, and what your timeframe is for doing them. Some of these are easy, like the vacation cost. But still, you shouldn’t trust a TikTok that some rando made about a $500 all-inclusive 🙃 Plan it out as if you are actually going to book it yourself, and get the hard number.

Others will be more individual. Like how much money you need in an emergency fund to make you feel confident and secure in your finances. 

There’s no right or wrong answer for those types of goals, it’s all about what’s right for you 🫵

2. Lay out the numbers

Ok, so now you’ve put some financial numbers to your dreams (wow, that’s a capitalist nightmare of a sentence, but here we are), you’re list should look something like this:

1. Pay off credit card - $400 within next 6 months
2. Mexico vacation - $1,000 by next summer
3. Mortgage down payment - $20,000 in 47 years (well, hopefully a little less than that)
4. Emergency fund - $1,000 in 12 months

Now you’ve got a bunch of hard figures that, if you reach them, will make your vision a reality. Honestly, this step is one of the most difficult. We’ve all got dreams and financial goals, but getting specific about what they are and how much you need makes reaching them a ton more achievable.

3. Set the plan

Now you’ve just gotta pay for them all 💀 With timelines and amounts, you can work out how much you need to set aside each month to get there. Take the emergency fund, for example.

To get together $1,000 in 12 months, you need to stash $83 each month to reach that financial goal. Now all you have to do is transfer that money in it’s own little savings pot (which Cleo can help you with, by the way, using her save feature) and in a year, you’ll be walking with that emergency fund swagger 💅

But there might be a bit of a gap. Maybe you don’t have enough cash coming in each month (I mean, who does), in order to do all these things. That’s where the next step comes in.

4. Adjust your now to create the future

Time to pull your big girl pants on. It’s time to sit down in front of the mirror and decide what’s more important to you. If you need to find more cash each month to set aside for these goals, you need to either cut other things that you’re spending that money on, or earn more to bridge the gap.

Our preference? Earn more. Yeh, it’s not easy, but who wants to cut even more joy out of their life? Nuh uh.

Or, you could do a combination of both, cutting costs that you don’t really care about anyway, and earning a little more money too. By now you’ll have used the calculator app on your phone more than you have in your entire life, so you should know how much you’re short in the monthly cash needed to reach these goals.

Say that amount is $400. Rather than getting Doordash once a week, you could shift it to once every two weeks, cancel the gym membership you never use, and keep your existing phone when the contract runs out in a month. That might be $150 right there, and will make pretty much no difference to your life.

With a few extra shifts at your job or a side hustle picking up another couple of hundred a month, you’re there. The key is to work out where your money is going and prioritize. It doesn’t mean not having fun or spending money, it just means being mindful about where that money is going 💆🏻‍♀️

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Set financial goals with Cleo

Look, we know all of this can be a bit overwhelming. But lucky for you, Cleo’s the AI savings app which can be your personal money coach, right in your pocket 🙋‍♀️