With only a few days until the new year, I have been reviewing my financial performance and comparing it to the targets I set at the beginning of the year. Overall, I’d say I achieved about 50% of my targets, which is not enough to excite me, but more than enough to keep me from being discouraged.

I have discovered some flaws in the execution of my plans which negatively affected my performance, and by addressing them, I think next year’s performance would be better. In this post, I will share what I have learnt about setting financial goals in the hope that it would help you improve your goals.

It’s not enough to track earnings and spending

(I am going to assume you already track your income and expenditure via a mobile app or spreadsheet. If you do not, please make that your first goal.)

I have been tracking my earnings and expenditure for 3 years now, and the information lost its lustre about 2 years back. Yes, it is essential to know what you are earning and what you are spending on, but what’s the relevance if it does not influence your actions? In order to let my spending be guided by my past data, I am setting a limit on each recurrent expenditure category for next year based on my patterns over the last year. If you do not already have this data, you can start tracking over the first quarter of next year and let that guide the rest of the year.

Income targets matter too

One of my flaws this year was that I set an ambitious savings target without any serious plan to raise the income necessary to bring it to fruition. Not surprisingly, I missed my savings target by a wiiide margin. You can only cut expenditure by so much (unless you are really living an unsustainable lifestyle) therefore you have to put in the work to get work to support your main hustle. (By the way if you want to help me in this regard, here are a few of the services I provide.)

Cash still rules

It’s been a quarter of a century since the Wu-Tang Clan released C.R.E.A.M (Cash Rules Everything Around Me) and their words still ring true to this day! To this day! Yes, I love the convenience of e-banking, mobile money and third-party payment apps but they do make spending a tad bit too easy. It is difficult to tell yourself you have a spending limit when you have access to your bank account on your phone. In order to bring impulse buying under control, I’m going to keep more funds meant for spending in cash, disconnect any e-banking or ATM access to one of my accounts to reduce withdrawals, and keep one account connected for when I have to use it.

Penny wise, pound foolish

To refuse to spend in lengthening the lifespan of your assets or improving your income earning potential is not saving. The little money you save would end up costing you more in major repairs or lost income.

Enjoy yourself

Any financial target which requires you to consistently put yourself through hardship cannot be sustainable. I’m going to include a plan to have fun in next year’s financial goals. Preparing for it would avoid the splurges which occur when you act on the spur of the moment.

I hope you enjoyed this post. May the coming year make you happy and prosperous!