FINANCIAL FRESHMAN #027
TL;DR → Regardless of where you are on your personal finance journey, you can find value in setting financial new year’s resolutions. Make sure your goals are “SMART” goals, and that they focus on leading measures, rather than lagging ones.
A Quick Reflection
This year has been a blast! Together we’ve learned about 401(k) plans, evaluating job offers, credit scores, credit card interest, student loan repayment options, and index funds. Even with the consistent writing on my end, it still feels like we’ve barely scratched the surface when it comes to the world of personal finance. That’s a good problem to have.
As the year comes to a close, it can be natural to start thinking about goals you’d like to accomplish in 2025. Maybe they are related to your academics, or potentially they are fitness-related. I’m here to remind you that financial goals are critical as well.
The Importance of Goal Setting
If you just finished up your final exams, you may think that it’s too early in your life to brainstorm some financial goals to tackle in the New Year. Allow me to remind you that your adult life will be filled with personal finance goals, both short and long term. Maybe the goals themselves are less critical today, but proving yourself capable of setting a goal and sticking to it will pay dividends as you transition to your full time career.
When I think about goal setting, I am always reminded of this quote that I came across in Brian Tracy’s book Eat That Frog:
“Planning is bringing the future into the present, so you can do something about it now.” – Alan Lakein
This serves as a reminder that any good goal comes with an associated plan to accomplish it.
Setting Good Goals
Before we brainstorm some goals together, let’s talk through some generic best practices for goal setting.
Make them SMART: Your financial goals should be Specific, Measurable, Achievable, Relevant, and Time-Bound. This is the difference between “I want to save more money” and “I want to save $2,500 by the end of 2025.”
Focus on Lead Measures: I first learned about “leading” versus “lagging” measures in the book The 4 Disciplines of Execution. Take, for example, someone that has a New Year’s resolution to lose 15 pounds. Weight, in this case, is a lagging measure. It reflects the outcome they are working towards but doesn’t tell them what actions to take. Leading measures focus on the daily or weekly actions that drive the outcome, such as exercising four times a week or packing a healthy lunch each day. By ensuring your goals focus on the process rather than just the outcome, you’re in the driver’s seat of accomplishing them. I like to think about a Newton’s Cradle sitting on a desk. Make sure that you are focusing on the ball that starts the motion, not the one that responds.
Celebrate Small Wins: Recognizing progress, no matter how small, can keep you motivated. Did you save your first $100 toward your goal? Treat yourself to something small and meaningful (but still budget-friendly) as a reward.
Pick a Goal, Make a Plan
Let’s rapid fire through some SMART goals that focus on leading measures, that could be relevant regardless of where you are in life.
Getting a Job or Internship
- Apply to five internships in my field of study this Spring semester
- Attend two career fairs and follow up with at least 10 recruiters by March 31st
Improve Your Spending Habits
- For the entire month of January, track all of my expenses manually in a notebook
- Cook three dinners at home each week to reduce my dining out expenses to less than $200 per month
Increase Your Financial Security
- Automate the transfer of $100 from my Checking to my Savings every two weeks when I get paid
- Pay off $500 in credit card debt by allocating $50 per week towards my balance
Plan for Your Financial Future
- Open a Roth IRA by the end of February, and set up automatic contributions of $250 per month
- Choose one index fund to invest in, and automate a contribution of $100 per month
As you can see, each of these goals highlight both the desired outcome, and a plan on how you’re going to get there. Including both pieces of the equation is key to successful goal setting.
Final Thoughts & Thank You!
Obviously, this will be the last Financial Freshman post of 2024. I started this website five months ago not knowing entirely what to expect. I had a suspicion that college students were an underrepresented demographic within the person finance corner of the internet, and the support up to this point has proven my suspicion correct.
Big things are coming in 2025, and I’m motivated to turn this website into a place where every college student can gather all the resources they need to build a solid financial foundation after they graduate. If you feel like you’ve learned something from these posts the last few months, please consider providing your email below to subscribe and support the website.
