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Listen to the Podcast Here: 9. 3 Financial Goals You Should Actually Set for 2023

We’ve all heard the stats about how most people give up on their New Year’s resolutions before the end of January and how almost no one keeps them through the end of the year. It’s unfortunate that setting goals that you won’t achieve is the norm, but there are some simple solutions to setting goals that you will actually stick with and achieve.

Financial goals are some of the most common New Year’s resolutions, which is awesome because setting financial goals and working towards achieving them is such an important step towards taking control of your finances and accomplishing your long-term goals.

However, most people set very vague financial goals that focus on outputs like “sticking to a budget,” “saving more,” or “paying down debt.” While these goals are important, they’re too broad, lack specific targets to work towards, and fail to focus on the inputs that lead to achieving results. The key is to be more specific and to set implementation intentions that will help you follow through on reaching your goals.

Atomic Habits

On the morning of the day that I planned on writing this blog post, I saw a Tweet from James Clear, the author of Atomic Habits, that I felt demonstrated this point really well. It said:

“The edge is in the inputs. The person who consumes from better resources, gets better thoughts. The person who asks better questions, gets better answers. The person who builds better habits, gets better results. It’s not the outcomes. It’s the inputs.” – James Clear

I might as well just read the book Atomic Habits for you, because it has shaped much of how I think about setting and achieving goals. I’ve read it multiple times since the first time I read it in January 2020, and I find something new that sticks with me every time I read it or that I hear James Clear speak.

Instead of setting vague financial goals, consider setting more impactful input goals that focus on building habits that will help you achieve your financial objectives. Here are some examples of common New Year’s resolutions that people set and of better input goals you could set for 2023:

1. Instead of Sticking to a Budget, Set a Goal to Track and Review Your Spending Weekly

The idea of sticking to a budget and what it could help you accomplish is great. Setting a goal of “sticking to a budget” won’t get you anywhere. If that’s your goal, then you’re never going to achieve it. It’s way too vague and it doesn’t mean anything.

What even is your budget? How will you know if you’re sticking to it? When and how will you check in on your progress?

You need an action plan, input goal, implementation intention, or whatever you prefer to call it, in place to accomplish what you’re going for here.

Your input goal should look like this: I will [Behavior] at [Time] in [Location].

An example of making “sticking to a budget” into a better goal might look like this: I will track and review all my expenses in Mint at 9 AM on Saturday morning with a cup of coffee at the kitchen table.

Notice how specific and precise my example is compared to “sticking to a budget”. Also notice how it focuses on the input of tracking and reviewing expenses, rather than the outcome of sticking to a budget. If you track and review your expenses weekly, then it will be much easier and much more likely that you’ll stick to your budget.

If you track and review your spending weekly, then it shouldn’t take much time at all. Pushing it off more infrequently than that will make it a much more daunting task once the time comes.

Having a great spending plan in place is the key to improving your finances. Of course, that means that you will probably want to have a spending and budget tracking system in place to help make things as easy as possible for you. Aggregator tools like Mint or Tiller that pull your transactions from wherever you spend, whether that may be your debit card or credit card, all into one place can go a long way in breaking down barriers to achieving this goal.

As Clear writes in Atomic Habits, “You do not rise to the level of your goals. You fall to the level of your systems. Your goal is your desired outcome. Your system is the collection of daily habits that will get you there.”

2. Instead of Paying Down Debt, Set a Goal to Pay a Specific Amount Towards Your Loan Every Time You’re Paid

I’ve written it before, and I’ll write it again: Setting the goal of paying down debt is a losing strategy. An input goal and a system need to be in place to help ensure that you actually accomplish what you want to achieve by paying down debt.

Do you know the specifics of all of the debts that you have? The balances, interest rates, term lengths, and minimum payments?

If you don’t, then the first thing that you need to do is to get organized. From there, it’s time to come up with a plan for tackling the debt. Do you prefer the debt avalanche method (paying off the highest interest rate loans first) or the debt snowball method (paying off the smallest balance loans first)? Or a combination of both?

An input goal that’s better than “paying down debt” would be to back into how much you would need to pay to reach a specific payoff date and to set up automatic payments each time you’re paid towards the loan(s) that you are trying to pay off. Not only does this strategy help you get closer to reaching your goals, but it is more intentional, is working towards a specific payoff date, and automating your debt payments will lead you to be more likely to succeed.

3. Instead of Saving More, Automate Your Savings to Hit a Specific Target by the End of 2023

Saving more money is another one of the most common financial resolutions that people set. Again, this is a great goal, but setting a goal of “I am going to save more money in 2023” is setting yourself up for failure.

How much do you want to save? What are you saving for? What account will you save in? How much will you save each time you get paid to reach your goal?

You need a more specific savings goal, and you need a system in place to help you successfully reach that goal. I know I sound like a broken record, but it is that simple. Having a great budgeting/spending plan in place as mentioned in number 1 above can really help you achieve your savings goal.

A more specific goal than “saving more” might be something like this: I want to max out my Roth IRA by setting up automatic contributions to my Roth IRA account of $250 every time I’m paid. (In 2023, the maximum Roth IRA contribution for someone under age 50 is $6,500. If you are paid 26 times per year and you contribute $250 to your Roth IRA each time you’re paid, then you will max out your contributions by the end of the year.)

In addition to setting a very specific goal, a few other keys to reaching your savings goals are to make your savings your number one priority and plan your budget after your savings have been allocated, making it as easy as possible to save by automating it, and by creating habit creep.

Habit Creep

Habit creep is another concept from James Clear that has two key components. The first key component of habit creep is to add to a habit slowly (think of the concept of 1% better each day), rather than jumping all in at once. The second key component is to change your environment in small ways that positively impact the likelihood of achieving your goal.

If you are currently saving 0% of your income for retirement but your goal is to save 10% in 2023, then habit creep would tell you to add slowly by increasing your savings rate to 2% (just an example). Then, you can see how that feels for a month or two and increase it by a couple of percentage points more if you’re comfortable with doing so.

Over time, doing this will allow you to adjust your spending along the way and will not be as painful as having 10% of your paycheck not available to you immediately.

Take Action

The value isn’t in setting goals, or even in setting better goals as we’ve discussed, the value is in taking action toward achieving those goals. While getting crystal clear on what you want to accomplish and how you will go about doing so is really important, at some point you have to transition from talking about it to doing something about it. Luckily, that’s in your control.

It’s easy to get caught up in trying to find the best strategy and to get stuck in your own head thinking about how big of a task you have to accomplish. But it’s important to remember not to overwhelm yourself and to start small to build habits that will last. Small actions applied consistently and added to slowly go a long way over time.

The whole reason that you set financial goals is to take control of your finances and set yourself up for long-term financial success. You won’t achieve the success that you’re looking for without actually doing something, no matter how small, to move you toward what you want to accomplish.

I’ll leave you with one final quote from Atomic Habits that I think sums this up well:

“If you haven’t started, then taking action is more important than finding the best strategy. If you’re already taking action, then ensuring you’re working on the right thing is more important than working harder.” – James Clear, Atomic Habits