At the end of every year, I like to have a State of the Union of Gaby Lapera. I make a list of everything I've accomplished that year, from work to hobbies. I go over my financial records. I note things that I especially enjoyed or loathed. I record firsts. I jot down the names of new friends. I typically end up with two to three pages of bullet points and summaries. 

Seeing everything you've done naturally makes you think of the things you want to accomplish. This is how I come up with New Years resolutions. Resolutions are a valuable way of adding structure to your life because they give you a goal that encourages you to plan.

Getting started
I am one of those people who absolutely loves organized lists. Of course, that means I have a list of rules for creating good resolutions. 

  1. Start from the top: I rarely want to work on just one part of my life. In order to organize the way I think about resolutions, I start by grouping my life into categories. For me, the categories are: work, education, finance, travel, hobbies, and fitness. I frequently make larger, overarching goals for each category, such as "Be more fit" or "Go to Mongolia." Once you know what your categories are, you can make resolutions that work toward meeting the category goal.
  2. Concrete and specific: My resolutions always have a quantifiable metric of success. For example, instead of saying "I'd like to get more fit," I say "I want to be able to run 15 miles by June." While the first is a rational desire, you have no way of knowing if you accomplished it. It works much better as a long-term category goal instead.
  3. Be reasonable: Don't make resolutions that are going to be impossible to accomplish; it's demoralizing and depressing. A trip to Mongolia has been a dream of mine since 2007. Unfortunately, it's really expensive and I haven't had the time. So, instead of making "Go to Mongolia" one of my resolutions, I set a much more reasonable goal of "Save $1000 this year for my eventual Mongolia trip." 
  4. Set an appropriate timeline: Some resolutions are quickly accomplished, some take longer. Just make sure that you check-in periodically. That way, if you've completed a resolution, you can add another! 
  5. Write down your resolutions: This sounds like a no-brainer, right? Except I have a friend that confessed to me that she forgot what her resolutions were last year. Write them down so you can reference them throughout the year and hold yourself accountable. Consider hanging them on your refrigerator or making them your desktop background.
  6. Allow wiggle room: Sometimes life changes suddenly. It's OK to change your resolutions to accommodate major life shifts. 

My financial resolutions for 2016
In May of 2015, I was dead broke. I had just finished a graduate program and had about $100 to my name. In June of 2015, I got my job at The Motley Fool. This heavily influenced my 2016 financial resolutions, which can be split into personal finance and investing.

Personal finance
Everyone needs an emergency fund. That's actually what I was using to support myself back in May. Mine was totally depleted. As soon as I got my job, I started setting aside as much of my paycheck as possible in order to rebuild my stash. My major personal finance resolution is to have nine months' worth of living expenses by the end of February. Remember, I started saving in June, so this goal is a little bit more short-term.

I created my resolution in terms of time rather than dollar amount because it will vary from place to place depending on cost of living. Nine months is generally considered a conservative amount for an emergency fund, but it matches my level of comfort with risk.

If you don't have an emergency fund yet, I strongly encourage you to create one and to calculate the amount you need to save based on your particular circumstances.

A quick tip to simplify saving for your emergency fund: set a certain percent of your paycheck to automatically deposit into a savings account every month. I do this for my 401(k) and IRA, too. You never see the money hit your checking account, so it's easier to resist the temptation to spend it so that you can live well within your means.

Investing
My investing goal is to buy 20 stocks by the end of 2016. I haven't started this goal yet because I need to finish saving for my emergency fund first. You should never invest money in the stock market that you might need in the next five years and you should definitely not invest money when you don't yet have a savings cushion.

Once I've completed my emergency fund, I can redirect the portion of my paycheck going toward saving and put part of it toward buying stocks.

Why 20 stocks? Although the number is a little arbitrary, I tried to pick an amount that would require me to build a diverse portfolio but wouldn't overwhelm me with research. Plus, this way I can put my money where my mouth is when it comes to the bank stocks I love to talk about on our Industry Focus podcast. 

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