When it comes to your personal finances, setting goals is only half the battle. The real question is whether or not you can achieve them. Putting goals into action and seeing them come to fruition takes focus, work, and a healthy dose of determination.

But if you aren’t in the regular practice of making financial goals, how do you know if you’re truly setting yourself up to achieve them? It isn’t easy to know where to begin, and if you aren’t careful, you can find yourself backsliding and forgetting all about your personal finances. So don’t let your financial goals become another forgotten New year resolution.

Below are five actionable ways to create and achieve your financial goals this year.

Get a Baseline of Your Current Financial Situation

You can’t figure out where you’re going unless you know where you’ve been. This is also true when setting financial goals. You may have a general sense of your finances and where you can improve, but it's important to get cold, hard data.

Start with the debts that you have. List out all of your credit cards and loans (whether it’s two or twenty) and include your current balance, credit limit, and interest rate. And if you haven’t been looking closely at your statements, now is the time to do it. Find out how much interest you are getting charged each month. This will help you fully understand where your monthly payments are going.

After you’ve got your debts listed out, think about all of the other payments that you are making. Include rent or mortgage, utility bills, internet and phone bills, and any other recurring payments that must be made each month.

Writing out your payday loan debts, money orders, and transactions is a great way to uncover issues lurking in your financial life. This will also help you identify the types of financial goals you should set in 2021.

Make Sure You Set The Right Goals

Give yourself the right goals to work towards. To start, think about what matters to you and where you want your personal finances to be headed in 2021. Then, write out everything that comes to mind. Don’t worry about organizing or making it look pretty.

Once you have your wish list put together, you can use the SMART principle of goal-setting to start building your 2021 financial goals. To use the SMART approach properly, you will want to make sure that you are creating goals that are:

Specific

Don’t be vague with your goals. For example, don’t just leave it at improving your credit score. Do you want your overall credit score to get to 700 or 750? Or would you rather set your goal by saying you want to improve by 20, 30, or 100 points? Think about the Who, What, When, Where, and Why to make every nuance as specific as possible.

Measurable

Tracking progress is not only important for measuring whether you have met your goal, but it’s also a great way to keep you motivated. If you’re building your credit, you need to download a credit monitoring app to stay on top of each and every change.

Achievable

Setting an achievable goal means striking a balance between being challenging and overwhelming. Ask yourself if you have the right resources to complete your goal. If you don’t know how to improve your credit score, are you willing to learn? Do you have online resources in place or a credit counselling service that can help?

Realistic

Make sure that you are setting the right parameters around your goals so that they are attainable. If your credit score is 500, it’s probably better to set an improvement cap at 600, instead of 750. Don’t set yourself up for failure right from the get-go.

Timely

Set an end date for your goal, and tell yourself that it must be completed by that time. Maybe you want your credit score to improve by 30 points within six months or 50 points by November. No matter your goal, giving yourself a timeframe is a crucial step in keeping you on track towards achieving it.

Once you have a list together, you can start separating the realistic from the unrealistic and identify what can be accomplished in the short term versus the long term. You will also get a sense of which goals are most connected to your motivation. As you write them down, pay attention to how each goal makes you feel. Does the thought of completing a particular goal make you excited or optimistic? If so, that’s a good goal to keep.

Know Your Credit Score Inside and Out

If your goal is to improve your credit score in 2021, then this is a no-brainer. But your credit score is a key part of your overall financial health and can have many implications for nearly any goal that you set. If you want to save up enough money to buy a new car or purchase a home, you can’t get away with ignoring your credit score. And for more long-term goals, having a strong credit score will act as the foundation for success later on.

If you want to request a copy of your current credit report from the major credit reporting bureaus, you are legally entitled to one free copy each year. Any additional copies will incur a fee. This cost differs from one bureau to the next.

Going directly to the credit bureau is not a bad place to start, but there are better ways to keep an eye on your credit. For example, instead of getting one-time copies, you should be checking your credit score in real-time to track your progress from one week to the next.

Best of all, you can do this for free without ever having to pay the credit bureaus for the privilege of seeing your score. Your credit card might include free credit monitoring as an opt-in, or you could sign up for credit monitoring through Credit Karma. Both options are free to use and will make the gradual changes and improvements throughout 2021 more visible to you.

Hold Yourself Accountable for Reaching Your Goals

Holding yourself accountable can be really challenging, especially if reaching your financial goals means sacrificing some luxuries. After all, substituting your spending on Chinese takeout for home-cooked meals can be difficult to stick to. Here are some good ways to own your goals, keep them top of mind, and make yourself responsible for following through:

Put Your Goals Down On Paper

Take the time to write your goals down on a piece of paper. This may feel a bit tedious, but the payoff is worth it. Just the act of writing your goals out will give your brain an opportunity to focus on them. This also increases the likelihood that they will stick in your subconscious.

You can make this even better by keeping the list somewhere you will see it often. Put your goals on a notecard and stick it to your bathroom mirror, on your refrigerator door, or in the visor above your driver’s seat. No matter where you put them, make sure they are somewhere you will see them often. You’ll thank yourself later on for the constant reminder.

Be Vocal About What You Want to Accomplish

Don’t be afraid to talk about your financial goals with the people in your life. This gives a whole new level of accountability. Knowing that other people are aware of your goals will make you much more likely to stick to them. It also means that they can offer support and encouragement along the way, which can be a huge help.

And there’s another benefit to this, too. Financial goals are one of the greatest equalizers; everyone has been there. Telling other people about what you want to accomplish opens the door for them to weigh in and share their own tips and tricks that they’ve put into practice in their own financial lives.

Don’t Let Other People Steer You Off Course

Let’s face it; your financial goals aren’t always going to align with the lifestyle you have now. If your goal is to cut back on your spending in order to start an emergency fund, one of your sub-goals should be to decrease the money you spend on dining out, going to the movies, or hitting the town with friends.

And when Friday hits and it’s time to relax for the weekend, it can be hard to resist the inevitable peer pressure that comes along with it. Or if your family is planning a vacation that doesn’t quite fit into your budget, you might wind up caving and saying yes when you really should be putting your financial health first.

Don’t forget that your financial situation is completely different from anyone else’s. It’s easy to get off course when you are comparing your spending and saving to other people's, but try to resist this as much as possible. Being open and honest about your financial goals can be a big help here. Still, you should recognize that letting other people influence your financial decisions can be a significant pitfall. Do what is right for your financial health and your goals.

Conclusion

Following through on your goals can certainly be challenging, but there are many ways to set yourself up for success and keep progressing. Follow these five steps to give your financial health a huge head start in 2021.