How to Set Financial Goals for 2022
If you're trying to set financial goals for the year ahead but don't know where to start, we've got you covered.
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When it comes to setting goals and resolutions, deciding on what is right for you can be challenging. I know for me personally, I used to suffer from paralysis by analysis when it came to goal setting. I would over-think the decision so much, that I just wouldn’t end up making a decision at all.
I didn’t want to set a goal that was too easy—but I also didn’t want to set something that was unattainable and would leave me feeling like a failure if I fell short. The pressure I would put on myself would usually lead to me procrastinating, and ultimately not setting any goals—which didn't feel great either.
After a few years of feeling stagnant, I got a little more intentional with my goal setting.
The following tips are for folks who are trying to improve their financial situation, but maybe don’t know where to start—or are just looking for reasonable goals to work towards.
Be S.M.A.R.T. about it
If you work in a corporate setting, you may have heard of S.M.A.R.T. goals before. In this context, SMART stands for Specific, Measurable, Achievable, Relevant, and Time-based.
Below you’ll find examples of each step.
Instead of just saying "I want to improve my finances in 2022", your goal can be something like:
“My goal is to have a fully-funded emergency fund by the end of 2022”.
Getting specific allows you to focus more clearly and hone in on exactly what you want, and exactly how you’re going to achieve it.
Making sure your goal is something measurable can also help to hold you accountable and give you better visibility on your progress so you can make adjustments as needed.
If your goal is to have a fully-funded emergency fund by the end of 2022, you’ll need to crunch some numbers. The general advice is for an emergency fund to hold 3-6 months of your monthly bills.
How much will you need to set aside each month in order to fulfill your goal by the end of the year? How often will you check in on your progress to make sure you’re on track?
Making sure your goal is achievable before setting it is crucial. This isn’t to say that you shouldn’t push yourself or be ambitious with your goals—but you do want to make sure that your goal is reasonably attainable.
There are different schools of thought when it comes to goal setting. Some people will tell you to shoot for the moon and even if you fall short, you’ll still push yourself to get further than you would have if you set a smaller goal.
Personally, I like to set little goals, smash them, and then immediately set another reasonable goal. I feel like the momentum I get from achieving a goal catapults me toward achieving the next one.
That being said if your goal is to save $12,000 by the end of the year, but when you finish your budget you realize you’ll only be able to save around $500 a month—you’ll obviously need to reconfigure your objective.
This one is pretty self-explanatory.
Make sure that the goal you’re setting is going to have a substantial impact on your overall financial health. For some people a financial goal consists of a material possession that they would like to purchase.
"I want to buy a BMW in 2022."
For the purposes of this article, we're focusing on goals that will improve your financial position—not financial goals that consist of purchasing depreciating assets.
Putting a time limit on your goals helps to keep you on track and get a gauge for your progress.
Scheduling periodic check-ins to see how you’re doing is also advised. If your goal is to save $12,000 in 2022, it would serve you well to check in at least every 3 months to see where you stand so that you’re not scrambling at the end of the year.
Set a Budget
If you haven’t already—my top advice for anyone setting financial goals in 2022 is to set up a budget.
Budgeting is the first step in gauging what you can and can’t afford, as well as how much you can set aside to save or invest.
If you need a little help setting yours up, an app like You Need a Budget can help.
Another solid goal for 2022 is to start tackling debt!
Not all debt is created equal—but things like credit cards, student loans, medical bills, and car loans are all things that you should be using expendable income to pay down.
Utilizing a system like the snowball method can help you to mitigate debt expediently.
If you don’t have a savings account that can cover 3-6 months of your bills, then an emergency fund would make a fantastic financial goal for 2022!
Calculate your total expenses for 3 months, and then set that amount aside in a high yield savings account. It’s generally advisable to keep this money in a savings account as opposed to investing it just in case there’s a fluctuation in the market. Fluctuations are to be expected—but the point of the emergency fund is to have it exactly when you need it.
Learn More About Investing
Unless you’re already putting up better returns than Berkshire Hathaway, a solid financial goal for 2022 could be to learn more about strategies for building wealth.
Our friends over at Personal Finance Club have an 8-hour wealth-building course that will set you up for success. In my Personal Finance Club review you can read about why I firmly believe I will become a millionaire as a result of the information I learned in this course.
The course is just $79, comes with a 100% satisfaction guarantee, and has a 4.9 star rating on Trust Pilot! Check out the Personal Finance Club course here.
Invest a Certain Percentage of Your Income
I recently saw a person tweet that their financial goal in 2022 was to “invest more”. This is an admirable goal, but let’s make it more specific!
What percentage of your income are you prepared to invest, and will you be doing it manually or on a schedule? Once you have a specific percentage in mind, you can take this goal one step further and automate your investments so that the funds are being pulled automatically from your bank account. Setting up the automation will be different depending on which investment platform you use, but I've found that it's fairly simple to setup on the major brokerage apps/websites.
Increase Your Income
Easier said than done, right? Maybe not…There are a few solid strategies for earning more money in 2022.
As it stands today, corporations are doing their best to keep employees happy amidst a national talent shortage. If you haven’t asked for a raise lately, now might be a good time to do so. If the thought of asking for more money turns your stomach upside down, check out our 9 tips for asking for a raise.
On the other hand, you may also try your luck in the free-agent market and search for a new higher-paying role. In which case you’ll want to check out our guide to writing a resume in 2022, as well as our article on commonly asked interview questions.
A Final Word on Financial Goals in 2022
Setting goals for your finances isn’t easy, but taking a closer look and planning out what’s important to you, should make the process less stressful.
If you have specific goals relating to paying down debt, investing more, and adding to your investments, you’re on the right path to being financially independent.