Financial Planning For The New Year: Steps and Tips for Setting Financial Goals

Whether you're saving for a dream vacation, planning to buy a house, or simply wanting to manage your money better, setting financial goals can help you get the most out of your hard-earned cash. Having clear financial goals lets you stay focused and motivated to work hard. Knowing precisely what you want will help you avoid unnecessary spending and regrets later in the year.

Let’s walk through the steps in planning your finances to start the year right.

Before going on a journey, you must know where you are starting.

Take a look at your income, expenses, and savings. List down your monthly income and track where your money goes. Is there room to save more or cut back on certain expenses?

How are your debts? Are you able to manage and pay them on time? Also, check if you have an emergency fund. If not, it’s a good idea to start building one first.

Now that you know where you are, it’s time to see where you want to go or, in other words, set your financial goals.

Think about what you want to achieve this year and beyond. Do you wish to pay off debt, save for a new car, or prepare for retirement?

Make your goals SMART—Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of saying, "I want to save money," say, "I want to save ₱50,000 by December."

Setting SMART goals makes it easier to plan because you know exactly your target amount. Meanwhile, the deadline creates anticipation and a sense of urgency that will keep you motivated.

Creating a budget is like giving your money a job. It ensures every peso has a purpose. Start by listing your income and expenses. Prioritize essentials like rent, utilities, and groceries. Allocate a budget for debt payments, too. Whatever’s left is for your financial goals. 

At this point, you should realize that the less you spend on unnecessary things, the more money you can put into your goals, and the faster you’ll achieve them. 

Life is full of surprises, so it's important to review your financial plan regularly. Set aside time every few months to assess your progress and adjust if necessary.

Whether it’s a job change, a new family member, or unexpected expenses, staying flexible will help you stay on track.

Consider talking to a financial advisor if you feel overwhelmed or need expert guidance. They can help you create a personalized plan and offer advice on investments and savings. Just make sure to choose someone trustworthy and experienced.

Financial planning doesn’t have to be complicated. By taking small, consistent steps, you can set and achieve your financial goals. Remember, the key is to stay focused, be patient, and celebrate your progress along the way. 

As the financial ally of Filipinos, Home Credit provides world-class financial inclusion to help you achieve your goals. Get tips on managing your finances and more on the Home Credit app, available on the Apple App Store and Google Play Store. 

About the author: Fitz Gerard Villafuerte is a civil engineer who decided to quit the corporate world back in 2003 to pursue freelancing and entrepreneurship. You can read more financial tips on his blog, Ready To Be Rich, which has won several awards including the Best Business and Finance Blog at the Philippine Blog Awards. He is recognized by Moneysense Magazine as among the Top 12 Most Influential People in Personal Finance in the Philippines. He is an author; an online content creator; a Registered Financial Planner; a resource guest for various television and radio programs; and a corporate speaker and trainer for several socio-civic organizations in the country. Lastly, he is the President of Wealth Arki, Inc., an investment consultancy, and financial planning firm that helps Filipino families achieve their financial goals.