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Manage Your Money Better in 2011: Setting Financial Goals

As 2011 gets underway, many people have sworn to get their finances in order in the new year.   Come on, admit it!  You probably made a money-related new year’s resolution.  The problem is most people go back to their normal routines and those financial resolutions get forgotten pretty quickly.

The first week of the year is a perfect time to define a plan to help you accomplish your finance goals in 2011. That means that it is not only financial goal setting time, but also planning!  If you want to set effective financial goals (and achieve them) for 2011, there are some steps you can follow:

1. Establish Your Priorities

Before you can set goals that work for you, it is important to know your priorities. Take a brutally honest look at your finances, and determine what is most important to you in terms of getting on track for 2011. Trying to do everything at once can be discouraging; having priorities to help you decide what to tackle first can help you set more effective financial goals. Have a hard time deciding what your priorities should be? Take a look at this list of 10 smart money moves for 2011.

2. Write Down Your Financial Goals

Once you know your priorities, you can write down financial goals that can help you manage your money in a way that is in line with what’s important to you. It is a good idea to write down your goals so that they become “permanent” somewhere. Additionally, make sure that the goals you set are measurable and achievable.  For example, if your goal is to stay within a tight budget, it helps to write the budget down (or set it up using budgeting software or web based tools).

Here are some popular financial goals for 2011 you may want to include in your plan:

3. Create a Plan

When you write down your financial goals for 2011, they might be rather general. In order to meet your goals, you will probably need to break them down into smaller milestones, as Lauren Young from Prism Money funnily reports for Reuters  in this video. Create a plan for reaching your 2011 financial goals, and be sure to offer small yardsticks along the way so that you can measure (and reward) your progress.

4. Periodically Evaluate Your Efforts

Your plan should include the opportunity to evaluate your efforts regularly. Check to see if you are still on track with your 2011 financial goals throughout the year. You can also tweak your plan if it appears that it is not working, or that you are having trouble meeting your priorities. Remember, frequent tracking is the only way you have to know you are on your way to achieve your financial goal.

5. Avoid Common Mistakes
As we get back to our daily lives, it is easy to fall into money routines that conspire against our own goals.   Keep an eye out for these common money mistakes and fence them off.

Setting financial goals can be a great way to take charge of your finances and begin to effect change in the way you manage your money.

Image courtesy of Morgan.

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