With the SMART acronym in mind, we’ve compiled 5 financial resolutions you might aim to achieve this year, and how you can reach them.
1. Budget to Create an Emergency Fund
Unexpected expenses could be a disaster for your finances if you haven’t planned accordingly. Ideally, an emergency fund covers at least three months of expenses. Don’t panic though, you can start out with a small savings goal each paycheck and increase it as you become more comfortable.
To calculate how much you should be saving for a rainy day, add up how much you spend on necessities each month, then multiply that number by 3. For example, if you spend $1,000 a month, then you should aim to have at least $3,000 in your emergency fund to cover yourself if a financial disaster were to strike.
Budgeting your money each month can help you see where you are over-spending currently. You might be spending excess money on subscriptions you don’t use or need, ordering out for lunch every day, or making too many coffee runs each week.
You might be wondering how you can implement the SMART formula with this goal, so let’s break it down together:
- Specific – Save $3,000 in your emergency fund by the end of the year.
- Measurable – Multiply your monthly spending by 3 to determine how much your emergency fund should be worth.
- Achievable – Ask yourself if this a reasonable goal given your current financial situation. If you find this goal to be within reach, use a budgeting tool. There are lots of free resources available on the internet. Suppose after your research, you discover you can cut costs elsewhere and put $250 a month towards your emergency fund. If you realize you can only put $50 a month towards your emergency fund, that’s great too! Just readjust the time frame of your goal. Small steps in the right direction are still an accomplishment.
- Relevant – Is this financial goal going to better the financial situation you’re in right now? If you have debt obligations with high interest rates, you might shift your focus to budgeting to pay off your debt rather than creating an emergency fund.
- Time-Bound – By budgeting consistently and saving $250 a month, you will be able to reach your goal by the end of 2025.
2. Prioritize Planning for Retirement
Retirement: we all want to be able to do it someday. What are you doing today that’s going to help you get there? Maybe you contribute to your 401(k) but are you maxing out your employer’s contribution in addition to your own? Americans commonly underestimate the amount they need to retire. Financial experts estimate that most of us will need about 60% to 100% of our annual preretirement income to live on each year after we retire. Use this calculator to see how long your retirement savings will last.
The sooner you start taking retirement planning seriously, the more time you will have on your side. Here’s how you can use the SMART formula to help with your retirement planning:
- Specific – Contribute a certain amount of money each paycheck to your retirement savings plan.
- Measurable – To make this measurable, enroll in automatic contributions to your 401(k) through your employer and contribute a certain percentage each paycheck. Try to to contribute enough to max out your employer’s contribution match.
- Achievable – By enrolling in automatic contributions to your 401(k) through your employer, you never “see” this money, so it might make this goal a little easier to achieve.
- Relevant – We all want to retire eventually; however, you don’t want to put a strain on yourself trying to get there. If you decide to make 10% contributions to your 401(k), ask yourself if you can live comfortably on a paycheck roughly 10% smaller . If you don’t think that’s feasible, set a lower contribution limit. Remember, baby steps in the right direction are still steps in the direction of success.
- Time-Bound – Retirement might feel like it’s far too close or forever away, depending on your age. How many years do you expect to work before you retire? Consider how much you would like to have saved in your account after a year, five years, etc..
3. Make a Plan to Pay Off Your Credit Card Debt
If you’ve accumulated debt on credit cards, try and pay it off as soon as possible. Not only is credit card debt typically high-interest, but if not managed correctly it can quickly become burdensome and hard to control.
Use the SMART formula to see how you can pay off your credit card debt this year.
- Specific – Pay off your credit card debt in full in a year.
- Measurable – By figuring out exactly how much you owe in credit card debt, you can make this goal measurable. If you are $2,500 in debt, your goal is to pay off $2,500 in credit card debt within one year.
- Achievable – Ask yourself how much you can afford to pay towards your debt each month and stick to it. If you ever have a month where you can spare the extra dollars to put towards this goal, strive to do so. If you can put roughly $210 plus interest towards your credit card debt each month, you will have your debt paid for in a year. If you can contribute additional money, you might reach this goal sooner. However, keep in mind your goal is to pay off your credit card debt, so you must temporarily stop using your credit cards until your debt is paid off.
- Relevant – Paying off credit card debt is something you should consider prioritizing for your financial wellbeing. If you have accumulated credit card debt, managing it proactively is a wise financial decision.
- Time-Bound – By dedicating at least $210 plus interest every month to your outstanding credit card debt, you will have paid it off in-full within a year.
4. Lower Your Student Loan Debt
Student loan debt can monopolize your finances as a young adult. By focusing on reducing this specific debt, individuals can plan their finances, allocate resources, and work towards achieving a healthier financial future.
- Specific – Reduce your student loan debt by 20% within the next 12 months by making additional monthly payments of $500.
- Measurable – By figuring out exactly how much you owe in student loan debt, you can make this goal measurable. If you are $30,000 in debt, and your goal is to reduce your loan debt by 20%, you need to pay off $6,000 of your loan within a year.
- Achievable – Ask yourself how much you can reasonably afford to put towards your student loans each month and stick to it. If you ever have a month where you obtain unexpected income or can spare the extra dollars to put towards this goal, make it a priority to do so. Additionally, you may consider exploring opportunities for loan refinancing to help you achieve financial freedom faster.
- Relevant – Paying off student loan debt should be a priority for several reasons. Clearing off debt provides financial flexibility, enabling you to save and make major life decisions without the burden of monthly payments. Paying your loans off early can save you a significant amount of money in interest accumulation, and it can help strengthen your credit score.
- Time-Bound – By committing $500 every month to lowering your student loans, you will have paid $6,000 off of your debt by the end of the year.
5. Focus on Increasing Your Net Worth
Building your net worth is about growing the difference between what you own and what you owe. Increasing your net worth isn’t just for the ultra-wealthy—it’s for anyone looking to build a secure financial future. Whether your goal is to pay off debt, save for a big purchase, or plan for the long term, growing your net worth gives you the financial flexibility to live the life you want.
Here’s how to make this goal SMART:
- Specific – Identify one or two areas to focus on, such as reducing debt by 15% this year or increasing your retirement contributions by $200 a month.
- Measurable – Track your net worth regularly by listing your assets (like savings, retirement accounts, and home equity) and subtracting your liabilities (like loans or credit card balances). Set a specific number you want to achieve by year’s end.
- Achievable – Look for realistic opportunities to grow your assets or reduce your liabilities. For instance, consider automating savings, or consolidating debt to lower interest rates.
- Relevant – Ask yourself why this goal matters to you. Are you preparing for a future milestone, like buying a home or starting a business? Knowing your “why” will keep you motivated.
- Time-Bound – Set a clear deadline, like increasing your net worth by $5,000 by December 31, 2025. Break it down into monthly or quarterly milestones to track your progress.
Every little step you take—whether it’s paying down debt, saving more, or planning for your retirement—adds up to big changes over time. By focusing on your net worth, you’re creating a strong foundation for financial success in 2025 and beyond.
Key Points to Remember:
There’s no time like the present to take control of your finances. By implementing these 5 SMART financial resolutions in your routine, you are setting yourself up for a financially successful new year. At SouthState, our bankers are always here to offer financial advice and make sure you have the best products and services to fit your needs. Contact a banker or step into one of our locations today.
