As one year ends, a new one begins, and updated goals should come with it. So what’s a good process for updating your financial goals for the upcoming year? I break my process into four repeatable steps. This task may be easy for some but a bit more complicated for others. The more organized and in tune you stay through the year, the easier this process will be.

I hope this helps you find direction in the coming year and creates a basis for making better financial decisions. If you have questions or would like help with the process, don’t hesitate to schedule a call.

Review your written goals for the past year. During this phase, be honest with yourself. If you achieved a goal, what factors led to your success? If you did not achieve a goal, what went wrong? Could you have done things differently, or were their extenuating circumstances? Don’t beat yourself up if you fell short of achieving a goal this year. Remember, you learned to walk by first perfecting the art of falling.

List your financial accounts and categorize them by their purpose. Now is a great time to review the interest rate on your saving, if the allocation of your investment portfolio still meets your objective, and who the beneficiaries are on each of your accounts.

List each debt you have and categorize them by purpose. When listing them, make notes of your balance, interest rates, monthly payments, number of payments remaining, and how the balance changed this year.

List your household income by the various sources and adjust for anticipated changes in the coming year.

This step is usually the most time-consuming part of the process. Start by reviewing where you have been spending your money, and then group the expenses into categories that make sense to you. Once you have them listed, adjust each for anticipated changes in the coming year.

I view protection as the instruments or accounts that protect your ability to maintain your lifestyle. This step entails listing and reviewing your insurance policies, including your Life, Disability, LTC, Property, and Liability policies. Also, verify your Foundation Fund is adequately funded and review all legal documents included in your Estate Plan.

During this stage, you will do a bit of self-reflection by looking at your lifestyle and habits. It is essential to be true to yourself when doing so; it is now that you set your compass for the upcoming year.

Are your current financial habits leading you to meet your lifestyle goals, or are they hampering your ability to achieve success? The most fundamental rule in attaining financial freedom is to spend less than you make, thus building resources for the future. How did you do this year, did your debt load increase because you financed your lifestyle, or did your assets grow because you lived below your means. Even if your assets grew, don’t put your guard down. Take a thorough dive into your current spending habits to see if you can become even more efficient.

The fundamental question is, are you living a life that makes you happy. If not, why and what do you need to do to change. Take this time to reflect on you and your family, your dreams, and what you are trying to achieve. Write this down along with your goals so you can keep your destination in sight. I would also reflect on this question: Did your decisions this past year move you closer to your destination or further away?

At this point, You’ve checked in on how you did last year, organized most aspects of your financial life, reflected on your habits and lifestyle, and by now, have most likely seen what needs your attention in the coming year to move you closer to your destination. So now it’s time for the best part, setting your sights on what is most important for you to achieve in the new year.

As you write down the goals that will help you move closer to your destination, remember to make them SMART; specific, measurable, attainable, relative, and timely. If you have multiple goals, you may consider listing them from most important to least important.

– As the calendar turns, find ways to keep both your Destination and Goals in front of you. It is easy to get lost in our fast-paced society and lose focus on what is most important to you.
– Identify an accountability partner and make a schedule to check in with them.
– Find tools and form habits to help keep your financial life organized throughout the year. I run through Steps 1 & 2 monthly to make sure we are on track to meet our goals for the year.

Brandon Haines, MBA, AIF®, CFP®
Brandon Haines, MBA, AIF®, CFP®