Financial Literacy Series #5: Set a Goal and Commit to the Plan
by Andy Watts, Executive Vice President & Chief Financial Officer at Brown & Brown Insurance
We are well into a new year, and many people have set new goals and resolutions, focusing on getting their finances on track. Unfortunately, ambitious aspirations often fade as quickly as they arise. A mere 9% of Americans achieve their New Year’s resolutions, and 43% didn’t even make it through January. Are you one of them?
For those of you committed to embarking on a new financial journey this year, know that saving that initial dollar marks the most challenging step. Once you’ve anchored yourself with a financial goal —short-term and long-term — each saved dollar and every passing month, quarter and year transform this endeavor into a habitual process that will get you closer to your goal.
Despite our best intentions, the journey toward financial stability can easily be derailed by the shiny object syndrome, that emergency repair, or a once-in-a-lifetime expense you didn’t anticipate. But amid the discouraging statistics lies a beacon of hope — a chance to shift the narrative and commit to our financial aspirations with a solid plan.
4 ways to stay on track with your 2024 financial resolution
As the possibilities of the new year unfold, staying the course on a financial resolution journey can be tricky. Within this journey lies the promise of long-term growth, financial stability and achieving your milestones, but how do you navigate it successfully? Here are four steps to help guide you:
1. Utilize your tools. Harness the power of the tools we shared in 2023 to forge your path to success. You have a template to track your expenses and a guide for projecting your income. We also debunked some common financial myths to keep you focused and motivated. It’s not just about having these resources; it’s about actively and consistently using them to guide your decisions and actions.
2. Reflect and set clear goals. Reflect on the past year to set concrete objectives for the year ahead, which might include:
- Increasing your income: Consider strategies to boost your earnings. Whether through career advancements, working additional hours or investments, think about how you can bolster your financial inflow.
- Amplifying your savings: Evaluate your desire to save more. Align this with a plan to augment your income or curtail unnecessary expenses. Did you review your expenses for the previous year to determine where you could curtail some spending? Hone in on the discretionary items.
- Creating financial milestones: Identify foreseeable significant events or expenses on the horizon. Whether it’s a car repair, home renovation, welcoming a new family member or a dream vacation, incorporate these into your financial blueprint.
- Planning your expenses: Scrutinize your monthly plans for the year to align them with your overarching goals. Establish actionable steps to steer your finances toward these targets.
3. Plan for the unexpected. Recognize that life can be unpredictable. Embed contingencies within your financial plan, such as:
- Building a safety net: Allocate resources for unexpected emergencies like appliance breakdowns or unexpected invitations. These unforeseen expenses can throw a curveball, but having a financial cushion mitigates their impact. Remember, if you plan for it and it doesn’t happen in that month, save the money as the surprise might arrive later in the year.
- Considering tax implications: As your income fluctuates, consider potential shifts in your tax bracket. Understand your obligations, especially if you’re part of the gig economy, where quarterly tax payments and revised obligations might apply. Incorporate your quarterly tax payments within your plan.
4. Distinguish between needs and wants. One of the hardest things to do is delineate between necessities and desires, which may involve:
- Creating essential funds: Prioritize establishing a rainy-day fund and nurturing your savings. Do you need to put this money into a separate account so you can see the balance building and not tempt yourself to spend it?
- Reflecting back: Assess your past expenditures. Identify the “must-pay” utilities, the “wanted” luxuries and the surprise expenses. Analyze the percentages or amounts of your income allocated to these categories, allowing you to fine-tune your budget for the upcoming year. Each quarter, compare what you thought you would spend during the quarter by category versus what you actually spent. This is insightful regarding your projections for the coming months and quarters.
A tip for starting fresh
As we move further into 2024, staying the course and getting a grip on our finances can feel like a fresh start. That first dollar saved is the trickiest part, but once you set a goal, every dollar saved and each passing year makes it more of a habit.
As a parting thought, consider this neat trick: Try squirreling away a small chunk of your weekly paycheck — say, $20 — for a rainy-day fund. Automate it, forget it and watch it grow. These small steps add up, making your money plans more robust and turning your resolutions into more than wishes; they become your money game plan for the year ahead. You will have the ball in your hands and can run for the goal.
Cheers to making those dollars count this year!
Frankly Financial
with Andy Watts, Executive Vice President & Chief Financial Officer at Brown & Brown Insurance
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