The new year is traditionally a time for setting new resolutions around establishing good habits. As 2021 kicks off, consider including financial goal setting along with other common resolutions such as exercising more and spending time with family. Just remember that as with any resolution, establishing the right target is just the first part of the process. You’ll also need a realistic strategy for reaching your annual financial goals.
Review your goals
Change is an inevitable part of life. Major life changes such as the birth of a child, a new job or a divorce may require you to adjust your financial goals. For example, you’ll want to start saving for a new child’s college education, while a job change could be an opportunity to boost your retirement savings with your new salary. Each new financial goal will likely have an impact on your existing ones, which means revisiting old goals and reassessing your overall priorities.
Big life changes aren’t the only reason to adjust your goals, however. Sometimes goals shift on their own, such as a change in your vision for retirement or thoughts of pushing up your retirement date. More gradual changes like these can also have an impact on how you prioritize your long-term goals. That’s why regularly reviewing your financial goals — such as at the start of the year — is a good habit to establish.
Get on track with an automated investment program
It can be hard to stay focused on large financial goals that are in the future, such as retirement. With all the other distractions in our daily lives, it can be easy to lose track of our progress and fall behind. An automated savings strategy can be an effective tool for ensuring you make progress toward a financial goal even when that goal is decades away. This kind of approach offers multiple benefits:
- Once you set up your plan, you can just check one more item off your to-do list.
- It helps make saving part of your regular routine by removing the temptation to spend that money on discretionary items.
- If your savings involve investments, an automated strategy lets you invest on a regular schedule, no matter what the markets are doing. This can help you avoid letting your emotions dictate when to buy and will help keep you in the market during a short-term downturn.
- Over time, a schedule of periodic investments allows you to buy more shares when prices are low and fewer shares when prices are high — a concept known as dollar cost averaging.
Whatever you ultimately decide to do with your financial goals — whether keeping the ones you have or adding new ones — the important thing is to make time to review them. Then, once you have a clear target in mind, consider setting up an automated savings strategy (including regular investment contributions where applicable) to help you stay on target.
Talk with your State Farm® agent, who can help you develop a strategy to fit your goals.