12.04.2024 By Amy Miller, AFC®

Creating a Financial Plan for the New Year

Year-end is the perfect time to reflect on your financial journey and use those insights to set yourself up for success in the year ahead. By reviewing your spending habits, savings progress, and overall financial well-being, you can create a personalized financial plan that aligns with your goals and what truly matters most to you.

 

Here’s how you can turn your year-end reflections into a roadmap for financial success in the New Year:

Reflect on the Past Year

Before you look forward, take stock of your financial wins and any setbacks or challenges over the past year. Ask yourself:

  • Did I meet my savings goals? If not, what were the obstacles?
  • How did I manage unexpected expenses?
  • What patterns did I notice in my spending habits?
  • Was I able to reduce my debt?

Use tools like your bank statements, budgeting apps, or savings tracker to identify trends and areas for improvement.

Saver Tip:  Pause and Reflect on the year’s financial journey. Find more ways to reflect here.

Set Realistic Savings Goals

Now that you’ve reflected on the past, set clear and achievable goals for the upcoming year. Your goals might include:

  • Building or replenishing an emergency fund
  • Saving for a big purchase (e.g., a car, home, or vacation)
  • Contributing to retirement or educational savings accounts

 

Saver Tip: Break large goals into smaller, manageable milestones. For example, if you want to save $500 in a year, aim to set aside $10 each week.

Create a Spending & Savings Plan

A good plan is one that fits your unique financial situation. Here’s how to start creating yours:

  • Collect All Needed Documents and Information: Before getting started, you’ll need to gather all necessary documents including pay stubs, 1099s, bank or credit card statements, household bills, etc.
  • Calculate Income and Track Expenses: Calculate your monthly income and fixed expenses (e.g., rent, utilities). This will help you determine how much you can realistically save.
  • Set Your Financial Goals:  Draw a picture in your mind of what your ideal life looks like and decide if your current plan supports that picture. Think about the things that matter most to you, make a list, and then rank them by priority and timeline.
  • Make a Plan to Achieve Your Financial Goals:  Now that your goals are set, you need a plan to achieve them. Remember, BIG financial dreams begin with small actionable steps! Breaking goals into smaller steps makes them easier to achieve and less overwhelming. Focus on one step or action at a time – each step will bring you closer to your goal.
  • Stick to Your Plan:  You’ll want to set yourself up for success and make it as easy as possible to follow through with your plan. Taking a few steps like setting up automatic transfers to your savings account or bills and identifying areas where you can trim expenses, can help streamline your finances and keep you on track.  

Dig in deeper with our Virtual On-Demand Workshop:  6 Steps to Establishing a Spending and Savings Plan (that you can actually stick to)

Plan for the Unexpected

If recent years have taught us anything, it's the importance of financial flexibility. Build a buffer for unexpected expenses by establishing an emergency fund with a goal of $500 and grow from there Remember, small amounts add up so don’t be discouraged if you can’t put much aside at first.

Monitor and Adjust

Life happens, which means, your plan might too! It must be flexible enough to adapt. Set aside time each month to review your budget and savings progress. Celebrate small wins and adjust your plan as needed to stay on track and focused on the big picture.

Leverage Tax Refunds and Bonuses

The New Year often brings tax refunds or year-end bonuses—perfect opportunities to jumpstart your savings goals. Use our 30/40/30 Rule to identify and earmark funds for your past, present, and future. It’s our approach to handling a windfall and an easy way to manage what you spend and save and help you do the best you can when you have additional funds available. Here’s how it works:

  • 30% goes to outstanding debt and catching up if needed – PAST
  • 40% goes to current living expenses, emergency fund, other needs and wants – PRESENT
  • 30% goes to saving for long-term goals, like homeownership, retirement, education, and other large purchases - FUTURE

Seek Support to Stay on Track

You don't have to navigate your financial journey alone. Building a solid financial plan is easier with the right support system. Start today by taking the America Saves Pledge and committing to a savings goal that matters most to you. We’ll send you tips, tools, and resources to help you set, track, and achieve your savings goals. Remember, reaching your financial goals is a shared effort—there’s no shame in asking for help or leveraging available resources to set yourself up for success.

Reflecting on the past year and using those insights to plan ahead is a powerful way to take control of your finances. By setting realistic goals, building a flexible plan, and staying committed, you’ll be well on your way to a financially secure New Year.

Together, let’s make 2025 your best financial year yet!

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