By: Eddy Silvera

The purpose of this article is to show you why financial goal planning is so important, especially at the beginning of a new year.

Since we are in early 2022 and the year kicks off, it is a good time to think about your finances. Why? Because this is the perfect occasion both to look back at last year and to strategize for this new year 2022.

Take this opportunity to consider how you did financially this year. For example, was it within your budget? Did you meet or exceed any of your savings goals? More importantly, what lessons did you learn that you can apply in the future? What financial goals do you want to set for the future? Determine how you want your financial picture to look in 2022.

The purpose of this article is to show you why financial goal planning is so important, especially at the beginning of a new year. It also includes a checklist covering investing, taxes, savings, and personal finances to help you stay organized while getting your financial house in order.

What are financial goals? Why do I need any for 2022?

You are probably already familiar with goals and how to set them. After all, we do this all the time. We set goals to exercise more, lose weight, improve our relationships, run marathons, learn new languages, etc. Some goals are short-term (eg, I will finish writing this article before lunchtime), while others align with our medium and long-term plans (eg, In two years, I will buy a house and settle down).

There are many reasons why setting goals is critical. First, they give us direction and purpose so that we don't wander aimlessly in life. Second, they help motivate us and help us prioritize what's really important. Additionally, goals allow us to track our progress and recognize when we have accomplished something significant. Lastly, they also encourage us to set and maintain realistic deadlines for the tasks we want to complete.

When it comes to financial goals in particular, all of these reasons apply, plus the added bonus that this type of goal setting can also relieve stress and anxiety by providing clarity and a sense of control. Setting financial goals, especially at the beginning of the year, can help alleviate this concern.

What are the top 7 financial goals you should set?

As you begin planning and thinking about your financial aspirations for the coming year, feel free to use the following list of seven common goals for inspiration.

Goal # 1: Organize Your Financial Documents

A good place to start is to get your financial house in order, as they say. Over time we accumulate a large number of financial documents (both paper and electronic). Set a goal to compile and organize them. Break this down into tasks like the following:

• Classify your financial documents and file / store important ones in a safe place (such as insurance policies, tax returns, mortgage documents, retirement and investment statements and guarantees).

• Commit to opening the invoices the day they arrive.

• Review your bank and credit card statements monthly.

Goal # 2: Track Your Spending

Other things you can do include set a goal to keep track of your expenses. Today this is easier to do than ever, so don't be intimidated! Just search online and choose a program or app that works for you or just use an excel sheet.

Goal # 3: Create (or update) your budget

If you're still not living within a budget, this is a great financial goal to set for yourself. Budgeting is one of those financial habits that really pays off in the end. It allows you to ensure that you have money for what you need and the savings goals that matter to you. Sticking to a budget can also help you pay off debt, prepare for emergencies, and stay focused on the long-term goals you've set for yourself.

Goal # 4: Create an emergency fund

Another financial goal to consider for the New Year is to create an emergency fund if you don't already have one. As we live through the Covid-19 pandemic, it becomes more apparent than ever how crucial an emergency fund is in the event that we suddenly lose our job or a large expense arises unexpectedly.

Set a goal of saving three to six months off your salary so that if the unthinkable happens, you can cover your living expenses for a period of time. Include saving for your emergency fund in your budget to reach this goal faster.

Goal # 5: Pay off the debt

Like many people in the region, you probably have some credit card debt. In fact, more than half of Panamanians and Central Americans have a credit card balance from month to month. While you are not alone, there are significant benefits to eliminating this debt, including:

• Reduce the amount of interest you have to pay.

• Improve your credit score so you can more easily qualify for loans with better terms (like lower interest rates) when needed.

• Relieve stress and anxiety.

• Being able to use the money that you had been putting towards paying debts for other purposes (such as saving and other goals).

Goal # 6: Set Savings Goals

Once you have a limited budget, setting some savings goals is a great idea. From saving for your next vacation to saving funds for your children's retirement or college tuition, you can create as many savings goals as you want. Just make sure your goals meet the following criteria:

• Specific

• Measurable

• Realizable

• Relevant

Time-bound (set a deadline)

Following these criteria when setting your financial goals will help ensure that you can realistically achieve them.

Goal # 7: Commit to Financial Literacy

This goal might be the most important of all. Whether you feel like you know a lot about money, savings, investing, etc., there is always room for improvement. Committing now to increasing your financial literacy will pay off throughout your life.

What else should I do for 2022?

Beyond setting several meaningful goals for yourself as we kick off into this New Year, you might be wondering if there are other financial tasks that you should check off your to-do list this time of year. Exist.

So that you don't feel overwhelmed, we've compiled an end-of-the-year financial checklist for you to refer to. It highlights different elements related to taxes, investments, savings and personal finances that are important to consider at this time of year. Look down.

End of the Year Essential Checklist

Personal finance

• Modify your budget to take into account any changes that have occurred.

• Make sure your insurance coverage (home, auto, and life) is still adequate.

• Plan for upcoming life events, such as home and vehicle purchases and job changes.

• Check the balances in your health savings account or flexible spending account. If your employer won't let you transfer money, spend what you have on qualified expenses so you don't lose it.

• Complete open enrollment and choose your employee benefits.

• Review your financial accounts, update payees, and make other changes as needed.

• Evaluate the progress you have made in paying off debt and create a strategy for the coming year.

Savings / Retirement

• Evaluate how you have saved in the past year and make any necessary adjustments.

• Check your contributions to your savings and retirement funds.

• Make a qualified charitable distribution to reduce your taxes.

Invest

• Sell ​​lost stock (tax loss collection) to offset your winners' income taxes and reduce your taxable income.

• Review your asset allocation and rebalance your portfolio.

Wrapping it all up: financial goals and the starting 2022 checklist

There you have it! Like any other part of your life, setting financial goals can help you stay on track, stay motivated, and give you a sense of control and peace. Particularly in the early years it's a good idea to refer to a financial planning checklist like the one above to make sure you're taking advantage of available tax breaks and staying on top of your budget, savings, and other goals. Between setting financial goals and tackling tasks on an early-in-the-year checklist, you're set to excel financially in 2022. Good luck!

For more information please contact me at email: eddysilvera@gmail.com or my WhatsApp: +507 66741344