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Setting Financial Goals for the New Year

Setting Financial Goals for the New Year

If the pandemic wreaked havoc with your financial goals in 2020, you’re not alone. No one could have foreseen such an event that changed all of our lives in countless ways. But one disruptive year doesn’t invalidate the importance of goals. Planning is a timeless, biblical principle.

“The plans of the diligent lead to profit as surely as haste leads to poverty.” – Proverbs 21:5

So, as you consider the year ahead, think back and see what 2020 revealed about your finances. Were your savings sufficient to withstand any financial setbacks you experienced because of the pandemic? That may be a place to focus on in the new year, building a stronger base of savings.

Maybe you’re one of the fortunate ones who ended 2020 in better shape then you imagined. You kept your job and spent less than planned on vacations or entertainment. If you are starting 2021 a surplus and can foresee another year of less than usual discretionary spending, what will you do with the surplus? Could it be used to further shore up savings or get out of debt? Could it be used for increased giving?

As you set goals for the new year, two suggestions may help.

1 – Less is more. This time of year, it’s easy to find articles about “20 ways to improve your finances in the new year” or “30 financial goals worth setting.” Just thinking of those numbers makes me weary. I don’t want 20 or 30 goals to keep track of, and I’m guessing you don’t either. Setting too many goals can be overwhelming, discouraging, and unproductive.

A long time ago, I learned the power of “A1” thinking. Of the many things we could put on our to-do list each day, there are just one or two that will make the greatest difference. The same is true with our finances this year. So, imagine that it’s this time of year next year. What single change to your financial situation would be most impactful? What would be the second most impactful? Set those two objectives as your financial goals this year.

2 – Focus on your habits. James Clear, author of the best-selling book, “Atomic Habits,” says when most people think about changes they’d like to make in their life, they focus too much on the outcomes they want to achieve and not nearly enough on the process that will get them there. Goals are important because they set an overall direction. However, as he puts it, “You do not rise to the level of your goals. You fall to the level of your systems.” And systems are all about daily habits.

Let’s say you’ve been sensing God’s encouragement to take the next step in generosity. You set a goal in faith to increase your giving by $50 per month. Clear would suggest first crafting an identity related to this goal, perhaps simply starting to see yourself as a generous person. Next, create a process or a set of habits that will help you achieve your goal. A good starting point would be to develop a budget that enables you to give at the level you feel prompted to attain. Make giving your first outgo category.

I always suggest creating a budget (or, as I prefer, a “cash flow plan”) where income is listed at the top, followed by giving, saving, and then spending. One reason many people don’t give or save as much as they’d like to is that spending comes first and then there isn’t enough money left over to give or save. Designing a budget where those priorities come before spending is a simple system that’s very effective.

Couple that system with the daily habit of tracking cash flow, perhaps with the help of an electronic tool like mint.com. That will enable you to proactively manage to the numbers in your plan. The idea is that you don’t wait until the end of the month to see how things turned out. Instead, you check to see how you’re doing throughout the month. Before going inside the grocery store, check to see how your spending so far this month compares with your monthly grocery budget. If you’re getting close to the limit, you know to focus on the essentials as you shop.

For most of us, 2020 was painfully disruptive. Hopefully one benefit from such a year is that it showed us what to focus on with our finances in 2021. So, spend some time reflecting on the year and praying for God’s wisdom as you set a financial course for the year ahead. Choose a small number of financial goals, focusing on the ones that would make the greatest difference in your life. Then consider what system and daily habits will help you get there.


Matt Bell is the author of four Biblical money management books published by NavPress. He speaks at churches and conferences throughout the country and writes the MattAboutMoney blog.

This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.

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