Money Goals: Doing Year End Review

With the year wrapping up soon, now is a wonderful time to do a year-end review of your money goals and set yourself up for an incredible year ahead!

Reviewing Your Money Goals for the Year

It’s that time of year again! 

Besides our monthly money reviews, one of the things we do is a deeper dive year-end review. It’s a way to review the numbers, celebrate wins, and adjust our system as needed to achieve our goals. 

Everyone has their own system, but the bones of the process are usually the same. 

  • We start by pulling up the goals we made for the year.
  • We review all our accounts – top to bottom – to see where we stand. 
  • We discuss what worked and what didn’t for us. 
  • We then take that information and use it to plan out the next year.

On paper, it’s a fairly straightforward process, but believe it or not, it can be fun and empowering, which may sound a bit crazy to you, but I hope to show how you can enjoy it.

In this episode, I want to:

  • take you through a high-level view of how it works
  • point out ways you can make the review run smoothly so you’re not scrambling to see all of your accounts
  • talk about how you can use your review to set things up for big wins next year

I hope you enjoy! 

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2022 Money Goals

 Before we look at the accounts and run the numbers, it's always good to review and discuss your goals. What were some of the things you planned on accomplishing this year? And how close are you to reaching your goals?

During these past two and a half years, something I've noticed that shifted with In terms of how we write our goals is instead of having several goals that we're trying to attack at once.

We'd rather go bigger with a few; then if time or circumstances allow, we can add in a few projects that we have on deck. And work on those. So for this year, we had two major goals and they probably sound familiar if you listen to the podcast.

The first one is pay down our mortgage and the second is invest in our brokerage.

First off, I just want to mention if you checked with us years ago when we were first married or when we were first getting situated with our finances, our goals were completely different.

That's because they should reflect where you are in our financial journey.

To get to this point, we had to make sure we had that financial foundation set So it doesn't sound exciting, but the first. Few years, we're just focused on getting a, a central emergency fund started. And paying off unnecessary debt. The first big one was the car loan and then working on the student loans.

So we're very grateful for where we are now. But to be clear, it did take time to get here.

Because it's just as important to discuss why you have these I'll give a brief overview of what we have planned for the future.

The reason we want to take our mortgage down from paying it in 30 years to 10 years is that we want to have more flexibility with our schedule. We both enjoy doing the work we do but we also have two kids that we want to have more time with.

We also have different projects that we want to do including more volunteer work. Having the mortgage paid off can take a burden off both.

That also ties in with why we're investing in our brokerage account. We are contributing to retirement.

But we also want to take care of those years where maybe we slow down on work but until that traditional retirement age, there has to be some kind of safety net there. So those are the goals that we have, and of course, If you've listened to the podcast for awhile, you know, That we broke them down further. I'm a big fan of smart goals.

If you're unfamiliar with smart goals, here are a few key things to know. You want to make them specific? So I said, pay down the mortgage, but we broke it down year by year. How much that we're going to pay down.

You also want it measurable. So if we want this by the end of the year, each quarter, what numbers are we trying to hit?

And then attainable. I've seen some people change this a for smart and make that ambitious and that's your personal choice? But I feel like if this is your first time working with goals, Just focus on building that habit. It's better to work on a few at a that you have a good chance of achieving rather than being overwhelmed in quitting.

The R in smart is result focus. So I discuss a bit of my, why. That's where you would put that. What's your motivation for doing and then time base. By having a deadline, it makes it easier to break down the step that you need to take and make sure you're hitting those milestones along the way.

With smart goals you're not just listing what you would like to do. But instead you're framing your goals into a timeline and breaking it down with milestones that you can track and make progress with.  

Review Your Numbers

One of the best ways to make your year end reviews go a lot Is already having your accounts organized. I did an entire episode about choosing the right money app for you.

In short, if you organize your finances with one of these it makes things so much simpler. There are so many great options out there. Some of them free, some paid, but those are low cost, and a great value for you.

I don't want you to stress over which particular budget app is best because it really does depend on how you approach finances.

For some families, they love having a simple high level view. While others want to go into the weeds and want to track every single cent.

I'll make sure to include a few of my favorites and ones that people enjoy in the show So that you can quickly look over them and see which one would be the right fit for you.

To give you an idea of how the process goes with running the numbers in reviewing your accounts, I'll just do a quick overview of how we would approach this.

Even though our two main goals involved, Working on the mortgage and the brokerage account we still look at all of our accounts so it does take longer than a monthly review.

But I feel good about this because then we get a clearer snapshot of where we are. I'll go over our monthly budget and make notes.

Throughout the year, how did the cashflow go? Were there times where it felt like the budget was tight and we need to adjust something or was it something that we could plan a little bit better?

An example was last month, we did a trip to Asheville. It was fantastic and we loved it. Because we planned ahead for it. We had the money in savings and we just made the transfers and things were paid for.

On the other hand I'll look into this more when we do our actual review in a few weeks, but at a glance, I'm noticing that our grocery Our higher than normal. Of course inflation is on the minds of many, and that could be the case. Or it could be a situation where we can make small adjustments that will offset the increased prices with our groceries.

We could do a better job with meal planning. Maybe we could batch cook a few meals, something along those lines.

Having these little notes as I'm going over the numbers makes the discussion go a lot faster.

We have a Google shared spreadsheet. My husband, Rob can then look at the spreadsheet and see what points and I'm trying to highlight. So whatever system works for you with that.

All right. Let's get into our goals. The first one is the mortgage. It's pretty straightforward. We're trying to take our 30 year mortgage and paid off in ten.

We're doing that by sending an additional mortgage payment along with our monthly mortgage payment that is rounded up. If we get any extra income a percentage of that automatically goes to paying down the principal.

Doing the math that comes out to about $20,000 a year going towards the principal.  

Is this a stretch? Yes, but it's doable. Again, it's about finding that balance between hitting all of our goals and still enjoying our time at a sustainable rate.    

Every family's going to have their own definition of what sustainable and what pace they want to go and that's okay.

If you spend any time online you'll see, there's plenty of financial advice where there are those who are absolutely want to be 100% completely debt-free as fast as possible. And then there, there are others who say, well, your mortgage is relatively low Why don't you put all of that money towards investments?

There are merits to both for us. We felt like combining these two goals and allocating a certain percent percentage to each was the right call for us.

We were able to do this because we ran the numbers and talked about it. If you're thinking of paying your mortgage off faster, I definitely would recommend checking out the Maury tree master From family money plan.

Andrew has put together a guide and a phenomenal spreadsheet that allows you to quickly compare and run different scenarios so you can find path and pace that makes sense for your family's particular circumstances and goals.

Let's talk about the brokerage account. This year is a good example of why you don't want to constantly check your investments. Things have definitely been volatile. Most people when checking their accounts to frequently are going to be tempted to make changes to how they invest.

If you look at the data, that's where you make big mistakes. Having an investment strategy means thinking longterm, having a plan. For us, This was focusing not so much on the returns we got, but making sure we had our regular contributions being.

This can be the hard part, especially when you are someone who likes to look at the numbers. But the data shows that while short term investing in the market can be volatile over the longterm it's more stable. Again, having these conversations can help the two of you stay on track.

Looking at the numbers in terms of contributions, we're on track because we have a monthly contribution that gets deducted and it goes straight into the brokerage account.  

There you go. Hopefully you see that if you set up your accounts, Either using an app or a spreadsheet. It makes things go so much smoother when you're doing the year end review.

Look Forward to Next Year

 For me, this is my favorite part. Planning out and brainstorming what we'd like to do over the next year or so. Having the numbers in front of us makes it really easy. To know if we need to change the pace of how we're going with our longterm goals. And it also lets us have an idea of what wiggle room we have to pick up some new goals as well.

And with planning your goals. I highly recommend go ahead and first write down everything in anything you would like to do. Don't worry. We'll whittle down the list But see, as you're writing this down, are there certain themes that are coming up with your goals? You may find that you have one big goal and then several small steps that go under that.

Or you could see that you each have your own interests that you really excited about. Now you can have a discussion and see where you align. What you can adjust. So that you're both happy with next year's goals.

For us, you saw with our two main goals, also longterm. We're definitely making progress and we're working towards them so we are going to keep them for the next year, but something we're definitely going to discuss in more detail are the house projects.

Kind of figuring out what we want to do. One of the ideas we have is finishing up the basement so that it could be living space. What would that look like? How much do we need to set aside for that? I think we're going to do the initial estimates pretty soon to get a ballpark idea.

We're also talking about with the backyard. Do we want to do a garden shed workshop or do we want to keep it a lot simpler and focus on the basement?

These are how the conversations go- what goals are we trying to achieve? Do they fit with our budget? Are they even aligned with the other goals?

A lot of it is back and forth. So I will say, well, you might do a main review with the numbers in one sitting. Many times the conversations about the goals you want to do are going to happen over several conversations and that's good.

This is what it's about. It's working as a family to see what projects we want to take on together and how we can work towards those goals.

Hopefully having listened to the different parts that we went over this process. You can see that it is fairly straightforward but it's something you don't want to rush.

If you haven't already talk about what time you have over the next month or so, where you can sit down, look at the numbers, I review what went well and then start planning for 2023.

You can then take those goals. And see if you can do a little bit of a setup before the year starts so that you already have that momentum going. I want you to have an incredible year!

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