It’s freaking freezing outside and that means 2017 is coming to a close so it’s time to set my eyes on 2018 with some financial goals to aim for next year.
Last year’s annual goals post had a mix of personal and financial goals but I’m focusing entirely on financial goals this year as I have another idea in mind for personal goals.
I find that there’s huge value in writing down goals and keeping tab on your progress. It serves not only as a guidepost for certain decisions but also as a motivational tool. It’s certainly a lot easier to gauge your progress when you have clearly defined and written down goals than it is if you don’t.
I noticed the value first hand when I did my Q3 2017 goal review, saw that I was behind on my savings rate goals, got my butt in gear and nailed my November savings rate. The jury is out on December but I think I’m doing well this month as well and that bodes well for my overall financial goals this year.
Last year’s goals included three difficulty levels for each goal, starting with the easiest; bronze then silver then gold. It’s just like the Olympics except way cooler; the OLYMPICS OF FINANCIAL GOALS.
Maybe I’ll have my artistic fiancee make me some medals for next year so that I can actually have something tangible to aim for or I’ll just make these salt dough medals. Those are just as cool as real Olympic gold, right?
If you haven’t read last year’s post then the idea behind these goals is to make Bronze a reasonable goal that can be hit with a little bit of work, make Silver a stretch and make Gold a long shot. That means that if I set the goals correctly then I’ll hit mostly bronzes at the end of the year so let’s see what those goals are this year!
- Bronze – Invest at least $31000 in new capital in 2017
- Silver – Invest at least $36000 in new capital in 2017
- Gold – Invest at least $41000 in new capital in 2017
As evidenced by the name of this blog, it’s all about time in the market and that includes investing new money every year so that it can grow with time. The market growth this year has been a big driver of my solid portfolio returns but a good part of that growth was also the new money flowing into the accounts with each paycheck.
I generally try to max my 401k, Roth IRA and HSA which almost gets me to 30k and that’s usually the plan at a minimum with some extra cash to get me across the finish line.
This goal last year was 30/35/40 respectively so I’m taking it up $1000 in each tier due to the likelihood of a small raise and the added benefit of the new tax plan. On the other side of the equation, I am getting married this year which will likely cost a little bit so I don’t want to take this too far up versus last year since my costs are likely to go up as well.
- Bronze – Collect $9250 in dividends
- Silver – Collect $9750 in dividends
- Gold – Collect $10250 in dividends
This one is always tough to gauge as I’m not focused on dividends right now as part of my overall investing strategy. The rise in prices has brought the yield of my portfolio below 2% and while my recent purchase have been bonds and REITs, the yield will likely stay near that number in the next year.
I collected about $7000 in dividends in 2016, will likely hit about $8250 in 2017 so a bronze goal of $9250 makes sense in my head. I’ll certainly try my best to get my dividend employee Steve his medal.
The goals last year were 8/8.5/9 so that means the bronze goal for next year is higher than the gold goal this year which speaks to the power of constant reinvesting when it comes to generating income.
I calculate my forward income right now in the $8600 range so additional contributions and purchases next year plus dividend raises from stocks I own should bring me within range of the bronze goal.
Savings Rate Goals
- Bronze – Gross income savings rate of 30.5%+ overall
- Silver – Gross income savings rate of 33.5%+ overall
- Gold – Gross income savings rate of 38%+ overall
This simple metric is how much of my gross income I’m saving any given year. The long term goal is to hit 33%+ on this metric consistently but I’m not quite there yet. I think I’ll be in the 30% range this year which was my bronze goal so I’m ticking this up a tiny bit with a 0.5% bump in each medal tier this year.
- Bronze – Savings rate of 40.5%
- Silver – Savings rate of 45.5%
- Gold – Savings rate of 50.5%
This savings rate is what I save versus net income after taxes. I think I may have a chance to hit 40% this year which was my goal last year so I’m bumping this up by 0.5% in each tier to match the gross savings rate goal changes.
I don’t want to go to high on both of these due to the number of extra expenses I’ll likely have this year as I’m getting married this year, will have my honeymoon and maybe even buy a home!
That means I’ll already have to cut back on other expenses to have a shot at meeting these goals and the point isn’t to make them impossible.
- Bronze – Savings rate of 50%+ in 3 months
- Silver – Savings rate of 50%+ in 4 months
- Gold – Savings rate of 50% in 5 months
This one has no changes from last year and the aim is to have a 50%+ savings rate in as many months as possible.
I think I’ll have to have as many of these as I possibly can since my wedding and honeymoon months will likely drag my savings rate into the dumps and be a big hit to the overall savings rates.
- Bronze – Reduce one bill in 2018
- Silver – Reduce two bills in 2018
- Gold – Reduce three bills in 2018
This is a simple goal that worked well in 2017 as I reduced my cell phone and internet bills with a few calls. There’s only a few bills to reduce and only so many times you can reduce them so it’ll be harder to hit anything beyond bronze in 2018 but it’s worth having it here since any dollars saved on bills will help those portfolio and savings rate goals.
- Bronze – Pay more than just my standard car payment in two months
- Silver – Pay more than just my standard car payment in four months
- Gold – Pay off my car loan
I’m down to $6600 or so on my car loan which means a few extra payments should knock it out of the park. I’m eager to pay this off ASAP but have to be realistic about this goal and my savings rate goals. The interest rate here is low and investments will likely return more in the long term so it might be worth just investing the money.
That might be the case but the allure of the extra cash flow and extra future savings rate improvement might be enough to force me to aim for the gold in this goal.
- Bronze – Reduce my restaurant expenses
- Silver – Reduce my restaurant expenses by 10%
- Gold – Reduce my restaurant expenses by 20%
This is a new goal designed to cut back on my expenses in order to boost my savings rate. Restaurants make up nearly 10% of my expenses and are the easiest way to improve my savings rate.
This one might be hard to hit since my honeymoon plan is a ~2 week trip to Hawaii which may include a lot of eating out but we’ll see!
- Bronze – Increase my income 3%
- Silver – Increase my income 6%
- Gold – Increase my income 10%
One of the easiest ways to improve savings rate is to reduce expenses but one can also just increase their income. That’s often not as easy as it sounds but certainly worth a try so I’m adding it as a new goal this year.
I’ll likely get some sort of raise and bonus in 2018 which should bring me at least close to the 3% goal. I predict something in the 2% range and I have no plans to change jobs which would likely bring me closer to that gold medal. That means I have to make some income on the side and I have two plans for that.
The first comes back to my side hustle; self-publishing stories on Amazon. I’m still making money off that despite not having written or published anything in quite some time. The dollar totals are lean($20-$40 per month) so I’ll have to step that up if I want to have that make a meaningful impact to my gross income next year.
The second is adding a bit of earning potential to this blog. The goal with that is not to earn a ton of money but to at least cover the costs of hosting the blog. I didn’t start this blog to be a source of income but now that the page views have increased, I figure it’s worth seeing if I can at least break even on this venture. If the earnings somehow exceed the costs of the blog then I’ll likely pour the money into the blog and do book giveaways on twitter or other fun things like that.
I don’t plan to do anything crazy, maybe just one small add and perhaps some affiliate links when it ties to the topic I’m discussing. I’m talking about things like amazon links during book review posts. I have no plans to make this blog an ugly ad laden mess or to hock terrible products. Even though my blog is small, I have gotten quite a few emails about selling back links and reviewing certain products for a fee but they’re not things I’m interested in supporting. I haven’t pursued anything in that area and don’t plan to in the future unless it’s a product I really like or use myself.
On top of that, I plan to start a second blog to talk about some of the things I like that aren’t related to anything financial. I do sometimes post some personal things here that don’t necessarily tie to investing but the kind of stuff I want to write about doesn’t really fit here and will fit better on a separate blog. Stuff like my review of the latest Trader Joe’s salad dressing I liked! These blogs will be completely separate and I don’t have any plans to tie them together or advertise either on the other in any way.
That means I’ll likely continue my side hustle series and include some of the blog data to see how I’m doing as far as generating extra income from both areas. I’m not sure if this will yield any good results but if I can add a little bit of extra income to cover blog costs and/or move that 2% raise into the 3% bronze medal then I’ll consider it a big success.
Just like last year, I wanted goals that are simple, easy to track and reachable with a little bit of work(at least for the bronze medals).
Last year, I included some personal goals but I chose to focus on financial goals this year for two reasons. One is that long term personal goals are hard to track and very vague and two is that I have an idea for some shorter term personal goals that I’ll write about in the near future.
The goals this year aren’t much different from last year and while I’d like to push myself further, I want to be realistic with what I can achieve.
The fact is that I’ll have a few guaranteed expenses this year in the form of a wedding and a honeymoon. That will likely mean I’ll have a tougher time with saving than I did in 2017. Some of the wedding expenses have started in 2017 but the majority of them will fall in 2018. I know a two week trip to Hawaii will certainly bump up my travel budget versus this year and my wedding will certainly bump up my entertainment budget versus this year. I’ll likely get some of that wedding money back in the form of cash gifts from friends and family but it’ll still likely be an overall expense at the end of the day that I didn’t have this year.
There’s also the potential that I’ll be buying a house as well and a lot of expenses come with that too! I have money set aside for that so that means it won’t hugely impact the savings rate but there’ll be unforeseen expenses that likely will.
That means I’m potentially setting myself up for failure by bumping up the goals from last year but that’s cool with me. I want these goals to be difficult and it’ll be OK if I fail because then I’ll be more driven to kill it in 2019 if that’s the case. Plus with the wedding and the honeymoon, if I fail, I’d have failed for a kick ass, once in a lifetime reason so it’ll likely be worth it.
I’ll be doing my 2017 goal review in a few weeks once I gather all that data but I think I did a pretty decent job in hitting at least most of my bronze goals. I think that’s worth celebrating for sure!
I hope 2018 will have the same results and I’m happy to move into the next year on a good footing with good, solid, reachable goals to aim for!
How about you – have you got your goals for 2018 all set and ready to go?