Start 2020 by setting financial goals that will serve you this year and well into the new decade.

Financial resolutions come with the New Year. They’re as much a part of the tradition as noisemakers and confetti, it seems. But as we start this January, we’re not just ringing in 2020. We’re forging ahead into a whole new decade. While the thought of making financial resolutions for the next 10 years might seem overwhelming, it’s actually a terrific opportunity to engage in a different kind of financial goal setting—one that reaches well into the future.

“Time is your friend when you are looking at anything around financial planning and investing,” says Marilyn Booker, who heads up The Urban Markets Group at Morgan Stanley. “It’s so important to keep a longer time horizon, because you have more time for your money to work and grow for you.”

Saving, reducing debt, funding education, paying for life’s milestones and retirement—these are the financial goals you can work toward this year and throughout your life. Here’s how to approach 2020 with an eye toward long-term financial goals, without losing the immediacy of the near-term.

Manage your Wealth

Find a Financial Advisor, Branch and Private Wealth Advisor near you

*Invalid zipcode

Financial Tips for the New Year

No matter what your financial goals are for 2020, consider dividing them into two categories: goals related to being prepared for the unexpected this year, and those related to what you want to be different at end of the year.

First, financial emergencies derail a surprising number of people. “Life just gets in the way, so it’s important to try to prepare,” Booker advises. According to Bankrate’s 2019 survey1 on financial security, only 40% of Americans would be able to cover a $1,000 emergency out of savings. The start of a fresh year is an ideal time to create some liquid savings goals, such as having three to six months of expenses in an emergency fund, possibly more if you have a spouse or dependents. Consider setting up an automatic transfer into the account each month until you reach your target savings amount.

Second, imagine yourself on December 31, 2020. What do you want to have accomplished this year, financially speaking? Is there a debt you want to have paid down substantially? A summer vacation you want to be able to book? Work backwards, and draw up a budget to clarify what you need to do each week or month to reach that goal. Using a basic spreadsheet or an app, plug in your numbers (income minus expenses) and make plans for how best to work with what’s left. What financial habits do you need to adopt if you want to make more than the minimum payment on a loan? And how will you track your progress? The key is to create a sustainable system that sets you up for success.

Your 10-Year Financial Plan

Creating a financial plan for the new decade means thinking strategically about your savings and investments—that is, tying them to specific, intermediate-term goals, such as saving for a down payment on a car or a vacation place. “To get from point A to point B, you need to be thoughtful and methodical,” Booker says. Knowing your goals, and how long you have to reach them, will help you figure out, for example, whether to put money into savings or to invest it.

A typical market cycle is five to seven years, so if you need the money in less time than that, consider putting it in savings—especially if you plan to completely fund the goal yourself and don’t need to rely on your money growing significantly. That strategy could be right for goals like taking a big trip abroad, tackling a home-improvement project or even making a down payment on a home in the next several years. For longer-term goals, such as funding retirement or college costs, investing is often a smart strategy.

The benefit of having a view of the next 10 years is that you can adjust for market volatility or unplanned life events that can occur in the short-term, such as illness or job loss. “There will inevitably be bumps along the way, so think ahead of time about how you will address them,” Booker says. Whether it’s helping your adult child pay for their wedding in two years or starting a business in 10, be proactive about setting milestones—and remember to course-correct along the way.

Longer-Term Financial Goals

The multi-decade time horizon can be the most difficult to think about, especially when day-to-day financial concerns are top of mind. But remember, the financial decisions you make today can have an effect on your life well into the future. After all, according to a 2018 Bankrate survey, people’s biggest financial regret was not saving for retirement early enough.1

A first step to having a long-term financial plan is to create your key goals, such as “I want to retire at age 65” or “I want to travel when I retire.” As you track those goals, you needn’t worry about day-to-day market performance. It’s your own financial behavior, namely how much you are saving and how you are saving it, that you need to pay attention to. Plan where you want to be with retirement saving in 10 years, 20 years, 30 years (depending on your age right now) and connect that long-term view with how much you’re saving currently.

One approach is to challenge yourself to beat the average retirement account balance for people roughly your age. For example, if you’re between the ages of 25 and 34 and your 401(k) account has more than $21,970, congrats—you’ve saved more than the average American in your age group.2 On the other hand, if you’re between 45 and 54 years old and your balance is below $115,497, you may need to start saving more to catch up with the average person your age.2

Especially if you have a spouse, children or grandchildren, you may also use this opportunity to think about legacy planning, such as drafting your will and creating a trust to specify how you’d like your wealth passed on. “People are very uncomfortable thinking about not being here on this earth, so they avoid having the uncomfortable conversations,” Booker says. However, wading into those topics will allow you to make decisions about the future on your own terms, versus having financial decisions made for you.

Ready to Develop Your Customized Wealth Plan?

“There is untold value-add in having help navigating the ups and downs of our economy and its impact on our financial lives,” Booker says. “A Financial Advisor can help you develop that roadmap to guide you through all of these critical life decisions.”

Morgan Stanley’s Goals Planning System is an innovative platform that links your financial information to your top concerns and priorities. Working with a Morgan Stanley Financial Advisor, paired with our technology, lets you access advice and build a wealth plan that aligns your investments with your goals no matter what your time horizon. That’s a financial resolution worth keeping.