5 smart financial goals for 2016

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You know how this works. You set resolutions and goals for the New Year and not even a week later you throw out that list and go back to doing things the way you were doing them before. Ok, maybe it takes you longer than a week, but chances are you are like most of us and never actually accomplish all those goals on your list. We think it’s time to change that.Financial goals always seem to be in the top 5 of most New Year’s to-do lists but sadly fall to the bottom of the list. Let’s decide that 2016 will mark a new year where your financial goals no longer find themselves in the trashcan, but rather become highly achievable goals that you can accomplish and be proud of yourself or achieving.Whether it’s starting a new business, paying off debt, getting your financial house in order or simply getting a working budget in place, taking charge of your financial future once and all for all should be at the top of your list.

Here’s my list of the top 5 smart financial goals you should focus on for 2016:

1. Master Your Budget

First things first: To achieve any goal, you've got have that goal well defined. If you want to travel to Hawaii on vacation (and who wouldn't?), you've got to know when you want to travel, how much it will cost you so you can save for it, and the specific steps you will take to achieve your goal.It all starts with mastering your budget. Your budget is like the GPS system for your goals and your entire financial future. You see, your goals are achieved through your budget because you know how much you need to save each month to make those goals possible. It's that simple.You need to get a system in place though if you plan on mastering your budget. You can decide to take an old-school DIY approach to budgeting or try a good budgeting app, but whichever method you choose, make sure you keep it consistent.Most budgets break down at some point, and this is why most people hate to use them. But just like when you were a kid learning to ride a bicycle, brush yourself off, get back up, and start budgeting the next month.

2. Build your foundation

If you’ve ever played the game Jenga you know how important a strong foundation is to winning. Your financial future is the same way. A lot of people want to jump right into investing in the stock market, but haven’t set up a strong foundation first. It’s a disaster waiting to happen.To build your financial foundation you’re going to need a few elements in place:

  • A budgeting system that you follow each month

  • An emergency fund saved with at least 3-6 month’s of expenses (you can set up a savings account at your bank, or try a higher interest earning account like Ally Bank or Capital One 360)

  • A term life insurance policy (take our 5-minute Insurance Checkup to find out what type of insurance is best for you, and what you can ignore)

  • A retirement plan in place that you are actively contributing to such as a 401(k), or an IRA or ROTH)

  • A good health insurance policy (plus it’s the law now, and 2016 marks even bigger fines if you don’t have health insurance)

Once you have those elements in place, you can start reaching towards other financial goals like investing, buying a house, and starting that vintage collection of Star Wars memorabilia.

→ Here are 7 startups that offer new ways to save money

3. Ramp up your savings

There are two top-secret ways to better your budget: make more money or spend less money. Maybe they aren't so top-secret, but nevertheless, most people get stumped on how to save more money each month. If you've followed #1 and #2, then you are 90% of the way towards being able to save more money. With a good budget, you should be able to cut down on your variable expenses (those expenses that change every month) and find ways to save, even if it's just a small amount each month.On average, you should aim to save at least 5-20% of your income (and more if you can). Before you ask the questions, yes, emergency funds and retirement accounts are part of this savings goal. Most people also open a separate savings account for goals like traveling and buying a house. In truth, you can have as many savings accounts as you like, but make sure you have an expense line in your budget to match, so you know how much to save in each account.There are thousands of ways to save more money each month. Everything from negotiating with your cell phone and cable companies to lower you bills, starting a side business from a passion of yours, using mobile apps to save money shopping, utilizing credit card points to buy gifts rather than spending cash, and starting an envelope system (where you put cash in for your entertainment that month, and when the money is spent, you have to wait until next month to replenish the envelope).Challenge yourself in 2016 to come up with at least two new ways each month you can either save more money, spend less money, or make more money.

4. Tackle your debt

There's the good kind of interest that you earn on your investments and the bad kind of interest that you pay on your debt. Obviously, the more good kind you have been the name of the game. If the debt has you bogged down, come up with a solid pay off plan to get yourself out of debt ASAP.Companies like Payoff (read our review) and SoFi offer awesome options to consolidate your higher interest credit card and student loan debt to lower interest loans that will save you bundles in interest over the life of the loan. You’ll need a solid credit score (anything above 720 is what you should aim for) and a fairly clean credit report to be able to score one of these loans.Alternatively, you don't need a fancy new loan to tackle your debt. One method for paying down your debt more efficiently is to find the credit card with the highest interest rate. Pay the minimum payment on all your other credit cards and throw all the extra money you were paying each month towards the card with the highest interest rate. Once that card is paid off, move to the card with the 2nd highest interest rate and keep repeating this method until your cards have a glorious $0 balance. It might take a while, so hang in there, and remember the best way to pay off debt is simply not to incur more debt.

5. Think outside the box

Two of the most important financial documents that you can take care of in 2016 are your will and an advanced healthcare directive. We get it, you don't want to think about these things, let alone take care of them, but we promise they are super important, so take note.Your will spells out who should get what. Without a will, all of your possessions are left to chance. If you have anything that you consider "of value" you will want to spell it out in your will. A will is also a useful document if you have children and want to name guardians.

→ Should you write your will online? Read our review of the free online service Willing.

An advanced healthcare directive is a document that lets everyone else know what your wishes are should you be unable to make medical decisions. While this is an icky topic, because of privacy laws, even family members would be unable to make life and death medical decisions for you unless you have this document in place that specifically names them.It's always best to use a lawyer to compose your will and health care directive, or if you prefer to go online, LegalZoom offers inexpensive ways to secure these documents.We hope this has inspired you to get working on your 2016 financial goals so it can be your best year yet. Whether you want to pay off debt, save more money or simply get your financial foundation in place, all it takes to accomplish these goals is an action plan and a commitment to make it happen.Photo: GSCSNJ