The end of the year is a time of many reflections on what we did right and wrong in the past year, as well as being a great time to think about the future. The topic of “money” is usually one of the main topics and, therefore, it is essential to know how to determine possible goals to ensure that we handle our finances better in the coming year.
In order not to just see promises and actually get off the ground, we must define possible goals. So, if improving your financial condition in 2021 is one of your goals for the coming year, be sure to consider these goals:
- spend less than you earn;
- create an emergency reserve;
- pay in cash whenever possible;
- use credit card only when necessary;
- save part of the income every month.
One thing is certain: the way we handle money is not 100% rational. This means that we often do not necessarily make rational decisions, as we cannot separate reason from emotion. And this is absolutely normal, we are all like that.
Emotions dictate much of our relationship with money and that relationship influences all other spheres of our life: our relationships, our professional life, our plans, etc.
Are you a person who often loses his head trying to save money? Know that it is possible to save and have quality of life. In order for you to be able to make smarter financial choices, we suggest reading this article here.
Now, if you’re planning for 2021, stay with us and see how to put goals that really work into practice. Good reading!
How to define possible goals?
Everyone has tried to do financial planning in the most traditional way: get a spreadsheet full of formulas on the internet, which are not related in any way to our daily lives.
Usually, after two weeks of trying, the result is that we get frustrated because it is a form of planning that is not very fluid, and we give up!
Therefore, we have brought some tips to ensure that in 2021 we have possible goals to achieve and put into practice what was planned!
The first point that we need to have defined is that it is natural for emotions to surface when we deal with our finances.
There are many emotions when dealing with money: the excitement of buying new clothes, the joy of finally paying off the apartment, the worry of seeing a credit card bill arrive and not having enough money to pay it, among so many others.
The truth is dealing with money can generate good and bad feelings. There are even a study of the APA (American Psychological Association) which indicates that 72% of Americans live in a situation of financial stress, which can generate anxiety and depression.
This reality is no different in the Brazil. So, understand that we are not completely rational, managing to separate these feelings from financial planning. Understanding this helps us to plan more down to earth to determine our goals (and not to throw everything away when those plans are not fully realized).
So, before you buy anything, control the impulse and think more than once: “Do I really need this?” After making this reflection, you will be able to have greater financial control and decide what is really worth investing in the next year.
There is no point in defining goals and action plans for 2021 if they are not within your reality. This can be considered self-sabotage and will cause you to give up already in the first months of the year.
So be clear about what your living costs are, put all the expenses of a normal month on paper, before defining how much you can save and what purchases you want. Remember to always consider your net salary, that is, the amount that is left over after paying all due taxes! This is what you will have on hand to spend or save.
Understand the triggers that make you spend more
As we said before, we often buy on impulse, the which is detrimental to our financial goals. Usually, this happens because we let ourselves be carried away by our emotions and by the “famous” triggers, which are nothing more than emotional reactions in the face of adverse situations.
For example, if you realize that you spend more than you would like on food delivery, understand what causes it: is it because you are out of food at home? Too lazy to cook? Feel like eating something different? Or maybe the stress at work has made you feel that you “deserve” to eat something delicious?
The way of dealing with the problem is different in each case. If for this question you answer that the problem is too lazy to cook, one way to end this problem is to cook only one day a week, leaving frozen meals to eat over the days. That is, it is possible to find solutions to eliminate the trigger of spending without need, either with food, or with other things.
But how to put these strategies into practice? When planning for possible goals gets out of hand, don't scour yourself! Remember that it is a north and not something that we need to follow to the letter. The most important thing is to build the habit of constantly looking at finances, making this a routine.
Here are some tips for putting your goals into practice:
- Pay attention to the anchoring phenomenon: our perceptions of price and value are very subjective. In an attempt to save effort, our mind works with benchmarks. That is, if we see an object now with a certain price, that price becomes our reference, we will always compare the price of the same object elsewhere on top of that first value, regardless of whether the real value of the object makes sense. This technique is widely used in commerce to ensure that we think we are doing a good deal, so we must be aware!
- In the book Nudge, by Richard Thaler, the author brings a very valuable tip: when you want to commit to a goal, share that goal with another person (s). Having this external commitment is a powerful way of ensuring that we stay on track.
- Behavioral economics, the intersection of economics and psychology, ensures that we understand a little better how we make decisions (and what we can do to make them more healthy and generous with our future self). Daniel Kahneman, the main researcher in this field in the world, indicates in his book Thinking Fast and Slow a resource for making good economic decisions: the “Delay”, that is, postponing decision making to have the chance to be emotionally more stable. It is as if this postponement gives us the opportunity to better consider whether a decision really makes sense or if it would just be an impulse.
- Make sure you talk about money and financial goals with the people around you: friends, family, partner. This encourages each other to help the other achieve their goals (and not to leave the plans for anything!).
5 possible goals for 2021 financial issues
Now that you know a little more about how to set possible goals for your financial issues next year, it's time to define what they will be. Check out the list below and learn about some important goals that should be part of your planning:
1. Spend less than you earn
One of the main possible goals for any financial planning is to follow this rule. With this, you will avoid debts and be able to have a healthier financial life in the next year.
Therefore, it is essential that you separate the money from the fixed monthly accounts and control the use of the credit card. This will make it easier to control expenses and keep them below your income.
2. Create an emergency reserve
We know that as much as we set possible goals to have a balanced financial life, setbacks can happen and mess up all our plans. Therefore, the more we are able to be prepared to deal with unforeseen situations, the lesser the losses that we may have.
Therefore, you should save some value, whenever possible, and reserve it for possible times of need and emergency.
3. Pay cash whenever possible
Another possible goal for 2021 is to give preference to cash payments. Often, merchants still offer discounts to those who do not share their purchases. Thus, you can still save and pay a lower price.
Cash payments help with financial planning, as they do not compromise future revenue with credit card installments. In addition, they reduce impulse purchases and subsequent indebtedness.
4. Use credit card only when necessary
In addition to the previous possible goal, the use of the credit card must be carried out in a controlled manner and with great care. When we use this payment method, we get the false impression that we have more money than we actually have.
Therefore, we should use the credit card benefits for emergencies or larger expenses already planned.
5. Save part of your income every month
Last but not least, you should make it a habit to save a portion of your income every month of the next year. We know that it is not always possible to reserve large amounts, however, after defining your expenses and plans, you can also stipulate a value to save that fits your reality.
With this money, you can build up your financial reserve and, over time, define the next investments you would like to make without having to go into debt.
As you can see, we have listed possible and simple goals so that you can start 2021 in a more organized way to achieve your long-awaited dream. financial stability. By setting realistic goals, it is possible to have a better sense of the usefulness of your money and, thus, persist in your goals until you complete them.
Were these tips helpful to you? Share on social networks and also help your colleagues to know how to control financial life in 2021.