Meeting Your Financial Goals: Setting Resolutions for Debt and Income

Achieving financial stability is a common goal for most individuals. However, to attain this goal, one must be committed to setting and achieving financial resolutions. This means setting realistic financial goals and taking action towards achieving them. In this article, we shall discuss two significant resolutions that can help individuals meet their financial goals: setting resolutions for debt and income.

Setting Financial Goals: Resolutions for Debt

   Debt is one of the biggest obstacles to achieving financial stability. However, with proper planning and discipline, one can effectively manage their debt and eventually become debt-free. Setting financial goals for debt involves determining the total amount of debt owed, creating a budget, and developing a debt repayment plan.  The first step towards setting a resolution for debt is to create a list of all debts owed. Next, the follow the recommendations below.

* Some people will not benefit from these recommendations.

1. Assess Your Current Financial Situation

Before setting goals, you need a clear understanding of your financial standing. Gather all your financial information, including:

• Outstanding debts (credit card balances, loans, medical bills, etc.)
• Interest rates and minimum payments
• Monthly income and expenses
• Savings and emergency funds

A detailed overview of your finances will help you determine how much you owe, where your money is going, and how much you can allocate toward debt repayment.

2. Set SMART Financial Goals

To make progress, your debt resolution goals should be SMART:

• Specific – Define what you want to achieve (e.g., "Pay off $10,000 in credit card debt").
• Measurable – Track progress (e.g., "Reduce debt by $500 each month").
• Achievable – Set realistic goals based on your income and expenses.
• Relevant – Align goals with your financial priorities.
• Time-bound – Establish a clear deadline (e.g., "Become debt-free in 24 months").

For example, instead of saying, "I want to get out of debt," a SMART goal would be, "I will pay off $5,000 in credit card debt within 12 months by paying $420 per month."

3. Prioritize Your Debts

If you have multiple debts, consider different repayment strategies:

• Debt Snowball Method – Pay off the smallest debt first while making minimum payments on others. Once the smallest is cleared, move to the next one. This builds motivation through small wins.
• Debt Avalanche Method – Focus on paying off the debt with the highest interest rate first, saving money on interest over time.

Choose the method that best suits your financial situation and psychological motivation.

4. Create a Budget for Debt Repayment

A well-structured budget helps allocate funds efficiently. Follow these steps:

• Track your income and expenses using a budgeting app or spreadsheet.
• Identify areas where you can cut unnecessary spending (e.g., dining out, subscriptions).
• Allocate a fixed amount toward debt repayment every month.
• Automate payments to ensure consistency.

5. Increase Your Income

If your current income isn’t enough to meet your financial goals, consider ways to boost it:

• Take on freelance work or a part-time job.
• Sell unused items.
• Ask for a raise or explore better-paying job opportunities.
• Invest in skills or certifications that enhance earning potential.

Additional income can accelerate debt repayment and build financial stability.

6. Build an Emergency Fund

Unexpected expenses can derail debt repayment. Aim to save at least $500–$1,000 in an emergency fund to cover urgent needs without resorting to credit cards.

7. Stay Motivated and Adjust Your Plan

Debt repayment takes time, so staying motivated is crucial:

• Celebrate small victories (e.g., paying off a credit card).
• Track progress visually with a chart or app.
• Find an accountability partner or join a debt-free community.

If circumstances change, adjust your plan while keeping your goals in focus.

8. Avoid New Debt

To prevent falling back into debt:

• Limit credit card usage.
• Stick to a budget.
• Differentiate between needs and wants.
• Build savings for future expenses.

Resolutions for Income

   Increasing income is another important resolution that can help individuals meet their financial goals. This can be achieved through various methods, including asking for a raise, looking for a higher-paying job, starting a side hustle, or investing in stocks or real estate.

   To set a resolution for income, the first step is to conduct research on the various ways to increase income. Then, evaluate personal skills and interests to determine which method would be the most suitable. For instance, if one has a passion for photography, starting a side hustle as a photographer may be a suitable option. Alternatively, if one has experience in a particular field, seeking a higher-paying job or asking for a raise may be the best option.