How to measure your financial progress towards your goals.
As we approach the last quarter of 2023, it’s important to consider checking in with your financial goals that you set back in January to see if you have stayed on track to achieve those goals. By checking in before the last quarter of the year, you have an opportunity to make any necessary adjustments if you find you have fallen off track. This will also give you an opportunity to consider what has and has not been working this past year, and that information can be used when planning your 2024 financial goals.
To check-in with your financial goals requires a little more work than having a peak at your bank account to see what you might have in your savings account. There are ways listed below to measure your progress to ensure you have been staying on track.
1. Are your goals defined? – To be able to measure the success of your financial goals, the goals themselves need to be measurable. This means a vague goal of “saving more money” might be harder to measure the financial success of compared to a goal of “save $5,000 by the end of the year”.
2. Did you set milestones? - By breaking your larger financial goals into smaller, more manageable milestones, the milestones can act as checkpoints along the way. By hitting each of your milestones, you are able to ensure you are on track to reaching your goals you have set.
3. Have you been updating your records? – Have you been keeping records of your financial transactions and account balances? Keeping these records allow you to ensure you are staying within your budget, still contributing to your savings, and paying down any acquired debt.
4. Are you paying down debt? – If you’re working on paying off your debt, track the reduction in your debt balances over time. By checking in with your balances on a regular basis, you can calculate how much debt you’ve paid off and how much remains. This allows you to make any adjustments to your budget to account for any changes in interest rates to ensure you are paying down your debt at the rate you would like.
5. Do you have a sufficient emergency fund? – If building an emergency fund is one your financial goals, monitor your growth over time. Ensure it’s reaching the desired amount to provide the protection you require in case of a financial emergency. If by chance you had to use your emergency fund, ensure you add contributions back into the budget to replace the amount that was used.
6. Have you had an in-depth look at your budget versus actual spending? – Regularly compare your actual spending to your budgeted amounts. Are you going over your allocated amounts in specific categories, or spending less in some areas than you thought you might? Identify the areas where change could be made. For example, you cancelled your cable in favour of streaming services and now there is a few dollars left over. Re-allocate those few dollars saved to a different category, such as adding it to debt repayments to pay down your debt quicker.
Measuring your financial progress is an on-going process so you can feel confident with your financial plan as you move forward. It will remind you of your financial priorities and help you stay focused, increasing your chances of successfully achieving the goals you have set. For the people who don’t have many fluctuations in income or expenses during the year, having a look into your finances once a year may suffice, but if you are someone who has irregular income and expenses, checking in multiple times throughout the year can help keep you on track.
If debt is keeping your from your working towards your financial goals, there are options.
If you are looking for advice, or a second opinion about your debt, it does not cost anything to talk about your options. Every financial situation is unique and viable options can differ from person to person. A conversation free of judgment is the first step to determine options for debt that make sense to you. For a free consultation, please call or text (506) 645-1814 or email jaime@tackledebt.ca; or visit www.tackledebt.ca.