A Comprehensive 7-Step Guide to Setting Financial Goals for the New Year, Including Investing Strategies

Written by Christopher Price

As we embark on a new year, now is the opportune time to reflect on your financial journey and establish tangible goals to pave the way for a more secure and prosperous future. Setting financial goals is a fundamental step toward achieving financial well-being, and a crucial aspect of this is incorporating sound investment strategies. In this guide, we’ll walk you through a 7-step process to help you set meaningful financial goals, including a focus on investing for the year ahead.

Step 1: Reflect on the Past Year

It has been a year full of ups and downs. Investments were focused on taming inflations and interest rates. We had a bank crisis with the collapse of Silicon Valley Bank. Questions about the future of digital currencies and the conviction of Sam Bankman-Fried. The growth of AI and the turmoil at OpenAI. The union strike of United Automobile Workers. With all this, the S&P 500 was up over 24% for the year. We can look at this in the same way as your financial life. We can find bad and good. Take a moment to assess your financial victories and challenges from the previous year. What do you want to do more of? What do you want to see less of? Were you able to save for the future? Did you lower your debt? Are there some goals you wish you had? Reflecting on the past year will help you determine what is important to you. It will also help you determine goals that are SMART for your 2025.

Step 2: Defining Your Priorities and Set Goals

Identify your top financial priorities for the coming year, and make sure to include investing as a key component. Whether you’re saving for a home, planning for education, or building wealth for retirement, clarify your objectives to guide your financial decisions. Here is a link to the six key areas. Use these to find what areas can be improved.

Step 3: Set SMART Goals

Some of you may have heard of this term before. SMART goals provide a framework that helps create clear, achievable, and well-thought-out objectives. Create Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) goals. For instance, set a specific target for how much you would like to save in your investment portfolio, like “save $100 every month from my savings account to my investments account. I will set up an auto withdrawal from my savings account to move to my investment account every 5th of the month. This will be done by next week. And I will review this next quarter”

Step 4: Create a Budget

A budget is one of the most boring parts of financial goals, but it is one of the most. This is the blueprint for what will happen and what you will allow to happen to your finances this year. A well-crafted budget is crucial for achieving your financial goals, and investing should be factored into this plan. Allocate funds for your investment accounts, ensuring that you consistently contribute to them each month. Diversify your investments based on your risk tolerance and financial goals.

Step 5: Establish an Emergency Fund

Before diving into investments or debt elimination, ensure you have a solid emergency fund in place. This fund will serve as a financial safety net and prevent you from dipping into your investments in case of unexpected expenses.  Many people start off with great financial goals, but something along the way knocks them off course. This is usually an unexpected expense that can’t be covered without using debt, like a credit card or dipping into your investment account.  An emergency account will be there to help keep you on track to hit those goals.

Step 6: Pay Down Debt

Reduce HIGH-interest debt before intensifying your focus on investing. The interest paid on debt can offset potential investment gains. This does not mean focusing on paying down all your debt before investing. For instance, many people have a mortgage on their home, and for most, it would be wise to invest in their 401(K) at work overpaying EXTRA to your mortgage. Key word, EXTRA. I can’t tell you what your goals should be, but paying your bills is important.

Step 7: Develop an Investment Strategy

Educate yourself on different investment options, such as stocks, bonds, mutual funds, and real estate. Set up an investment account that is for retirement, like an IRA or Roth IRA. Set up a non-retirement account; the non-retirement account is money you can use before retirement and can be used for large purchases down the road, like buying a new home. Consider consulting with a financial advisor to tailor an investment strategy that aligns with your risk tolerance, time horizon, and financial objectives.

Step 8: Review and Adjust Regularly

Regularly review your financial progress. I like to tell clients to review their financial goals every 90 days. These are your milestones. Make adjustments. if you notice, you are off track at the 90-day milestone. It will be much easier to get back on track and hit those goals than if you notice you are off track later in the year.

By incorporating investing into your financial goals, you’re setting the stage for long-term wealth-building. Following this comprehensive 7-step guide will empower you to make informed financial decisions, diversify your investments, and achieve the financial success you aspire to in the new year. Stay disciplined, stay informed, and embrace the potential of your financial journey. Here’s to a year of financial growth and prosperity!

Representatives do not provide tax and/or legal advice.  Any discussion of taxes is for general informational purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice.  Clients should confer with their qualified legal, tax and accounting advisors as appropriate. Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. www.SIPC.org  1000 Corporate Drive, Floor 7 Fort Lauderdale, FL 33334     Telephone # (954) 938-8800

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