At the beginning of each year, it’s always important to sit down and reflect on your family’s finances. To start the year off right, it’s time to start thinking about setting some smart money goals. These goals help you create a personalized roadmap designed to illuminate your path toward financial empowerment. Let’s take a look at some financial goals you might set for yourself this year to help create a brighter financial future for your family.
1. Create a 5-year plan
You can think of a five-year plan almost like a GPS for your family. This keeps you focused on your short-term goals while setting the stage to accomplish your long-term goals down the road.
Start by envisioning where you and your family want to be in five years. Career aspirations? Personal growth targets? Clear debt off the table?
Break down your ambitions into smaller, achievable steps. For instance, if you’re aiming for career advancement, consider short-term goals like completing skill-building courses or taking part in other activities to help continue your education.
This roadmap is your guiding light, helping you stride confidently toward long-term success. Remember, consistency, commitment, and perseverance are crucial for staying on track.
2. Create a one-year spending plan
A one-year spending plan is essentially a budget that’s expanded to outline your income and expenses over 12 months.
List your income sources and track your known expenses for the upcoming year. Categorize spending—essentials, treats, savings, debt repayment—and set realistic targets for each. This plan isn’t about restricting your family’s spending habits, but instead empowering you to make informed choices while keeping your financial goals in check.
3. Build an emergency fund
You should aim to keep anywhere between three to six months’ worth of your family’s living expenses in a separate account. You should sit down with your family to determine what counts as an emergency, and when it’s appropriate to dip into your fund. Things like major medical bills, unexpected car repairs, or sudden job loss could all be cause for concern.
If you need to dip into this account for whatever reason, make it a priority to rebuild your funds once the skies clear.
4. Pay down high-interest debt
Debt can kind of feel like a heavy backpack—shedding it lightens the load. Focus on tackling high-interest debts first. Whether it’s credit card balances or personal loans, develop a plan to chip away at these liabilities. Every payment made is a step closer to financial freedom.
5. Build an account for large purchases
We all have big-ticket dreams, but taking on debt for these larger purchases isn’t always worth it.
Rather than relying on credit, designate a special savings account to save for larger purchases. Having a dedicated space for the money for a new car, a dreamy vacation, or a future home down payment can help you visualize your progress while keeping your regular spending separate. Some banks offer higher interest rates for special benefits for certain savings accounts, so make sure to do some research to find the best savings account for your needs.
6. Start saving for college
Investing in your child’s education is a gift that keeps giving. Higher education has become quite an expense, and by setting up a dedicated savings account early on, you can start preparing to support your child on their educational journey. While you may not be able to afford to pay for your child’s education entirely, setting aside some money can drastically reduce the debt burden many face after they graduate from college.
Even modest contributions can grow substantially with compounding interest, so it’s important to find the best type of account to grow your investment for your child. Some popular options include:
- 529 College Savings Plan – This state-sponsored plan gives you tax-free growth and withdrawals for qualified education expenses.
- Custodial accounts – UTMA and UGMA custodial accounts allow parents to save and invest for their child’s benefit. These accounts are much more flexible in how funds can be used, especially if your child wants to use the money you’ve set aside for something other than college.
- Coverdell Education Savings Account (ESA) – This account is similar to a 529 in many ways, but it does have more restrictions on contribution limits and income thresholds.
7. Pad your retirement accounts
As moms, nurturing the future isn’t just about our children—it’s about securing our tomorrow too. Start or boost contributions to your retirement savings accounts. Consider employer-sponsored 401(k)s or IRAs to make the most of your investments. The earlier you start, the more time your money has to grow and secure your golden years.
In essence, these smart money goals aren’t about sacrifice—they’re about empowerment. They’re the stepping stones toward financial stability and a future where you can relish every moment with your loved ones without worrying about financial stress. So, let’s roll up our sleeves, crunch those numbers, and pave the way for a brighter, more secure tomorrow.