It’s a new year, time for new goals

With a new year, comes new goals and resolutions.

Whether it be saving more, buying a house or spending more time with family and friends, it’s important to consider how you will keep your New Year’s resolutions. No matter if your goals are personal or professional, writing them down on paper can help you accomplish them.

According to an article by, a person is 42% more likely to achieve a goal that is written down. That makes your goals more concrete and increases your motivation by engaging both sides of your brain.

It’s been said that thinking about your goals (basically dreaming), only uses the imaginative — right side — of your brain. When you write down your dreams or goals, you break them down in a logical way that uses the left side of your brain.

Let’s say you have a dream to reduce debt, or to save money for a down-payment on a new home. Breaking down the steps on paper can turn your goal from a dream to a reality. Check out this five-step plan to reducing debt and saving money in 2022.

Review the past year

During 2021, did your overall debt load increase? Did it stay the same, or is it less than what it was in 2020? It’s important to review your progress during the past year as a starting point.

Maybe you had medical expenses, or a car repair that resulted in your credit card balance being higher than average. On the flip side, perhaps you got a raise at work and have paid off one of your student loans or credit cards.

Whatever the situation, don’t deny your progress. If 2021 was a difficult year financially, just make a plan to change it in 2022.

Make a budget

Once you have a gauge on your overall spending and savings patterns for the past year, you’ll need to make a budget. If you have one, skip this step or review your existing budget in detail.

First, grab your last paycheck from 2021 and review your year-to-date earnings. You’ll be able to see both net (after tax) earnings and gross (before tax) earnings. Divide your net earnings by 12 months to get your average monthly take-home pay.

Next, you’ll want to break down your expenses. Take a look at the last few months of expenses — at least. This will help you determine your average expenses on a given month. If your net earnings minus your expenses is a positive number — great. Take that number and see if you’re on track to save for your goal this year. If not, or if that number is negative, you’ll need to dig deeper into step three.

Cutting back on your expenses

If you are in the latter category, you will need to access how you can cut back on certain expenses. That subscription that has increased every six months? It might be time to cut it. Dining out multiple times each week? You might want to cut that back to once per week or every other week.

If you are serious about paying down debt, and you haven’t had a large pay increase, you’ll need to be serious about reducing your expenses.

Let’s say you get a latte on your way to work each day. That $5 coffee each workday could cost you more than $1,000 per year. Also, start looking at the grocery ad. Meal planning reduces the number of times you go to the grocery store and can help you stay within your budget.

It could take some time but sitting down and listing your expenses is the best way to determine how to reduce them.

Set attainable money-saving goals

It’s important to build up a cash buffer for any emergency expenses. You should aim to save for six months of expenses in this account; however, you might need to start with something smaller — say $1,000.

Once these funds are saved, move them into a separate savings account so you aren’t tempted to spend them. Many of my clients have told me that they struggled saving for a home until they tried this approach.

Once you are set on the dollar amount you want to save in a given time period, divide that by the number of paychecks you’ll receive by that date. Then set up an automatic transfer of this amount into your new savings account each payday.

Set attainable debt-reducing goals

This step will go hand in hand with step four. Some will argue it’s more important to save for an emergency than pay down debt. Others will stress the importance of reducing debt as soon as possible.

The simple answer is that it’s not a simple answer. Each situation is different.

If you follow Dave Ramsey, you know that he recommends saving $1,000 in an emergency fund, then paying off all debt (besides your mortgage) before you begin saving additional money for your three to six months of expenses. Others have found it beneficial to save their three to six months of expenses while paying down some of their debt.

I think if you have a plan that you’re able to stick to, you’re on the right track.

Remember, step one includes writing down your goals. Ready, set, go.