Figure Out Your Financial Goals
No matter where you are in life, it’s always good to set some financial goals. You need to sit down and take a complete look at where you are now financially and figure out where you want to be. You can set goals for a year out, 5 years or 40 years. The important thing is to start now though.
Find some inspirations
Figure out a motivation for your goals. Do you want to put money away for your kid’s college? Do you want to retire early? Do you want to be able to travel more? Anything could be a motivation but it always helps to have some sort of inspiration so you can have a reward at the end of your journey. According to the 2017 America Saves Week survey, 56% of American households with a plan report making good or excellent progress meeting savings needs, compared with 24% of households without a plan.
Figure out your current situation
As we discussed in a previous post, you need to figure out your current financial situation. Since I already wrote a post on it, I won’t go into a lot of detail here. I will just mention that it helps a lot to know your current situation before you start setting goals. Your goals may be affected by the debts, expenses, etc. that you have now.
Some examples of financial goals
Create a budget
For some, this may be a means to reach a goal but for some, it might be a goal in itself. Budgeting and can tricky and hard to stick with, I know I have had trouble keeping to a budget in the past. So maybe it is your goal to create a budget and stick with it. I will have a follow-up post about different kinds of budgets and how to do them.
Improve your credit score
If you ever want to rent an apartment, get a credit card or buy a car or house you will need to have a good credit score. At first glance, credit scores seem confusing because there are different agencies and scores but they aren’t that difficult to understand. Once you understand how the scores are generated, you can take the steps needed to improve your credit score. I will talk more about this in a later post.
Pay off debt
If you have ANY debt, this should be a focus. Debt is a killer and you don’t want it lingering on your credit history. Just a brief mention here as I will go into more detail in a later post. There are numerous strategies and services out there to help you pay off your debt quickly.
Build an emergency fund
Many American’s have little to no savings build up. It has been shown in survey after survey and it is chilling fact. With no safety cushion, one little-unexpected expense such as a medical emergency, car accident or losing your job could destroy you financially. It is recommended to have an emergency fund of 6 months of living expenses or at least a minimum of $1,000. I will write up another post about the importance and reasoning behind a good emergency fund.
Save for retirement
Only with an emergency fund, many Americans have no retirement savings. Unless you plan to work until the day you die, you need to start saving and investing your money. The earlier you start investing the more you’ll have at the end because of compound interest. As with the other topics, I will discuss this more in a separate post.
Save for a new car
Maybe you have an old car that has been great up until now but you really want something new, under warranty, new features, more comfortable or just a dream car. Start a goal to set aside money every month for 3, 6, 12 months or whatever it may be until you can buy the car you want. Buying a car is a huge financial move but there can be some great motivation for doing so.
Cutting out expenses
Not all of you goals have to be saving up for something or putting money aside, it could be doing less of something. For example, you may look at your monthly expenses and see that you are eating out way more than you probably should. The average household spends over $3,000 a year dining out. Set a goal to cut out eating out 1 or 2 times less a week. That could save you hundreds of dollars every month.
Write out your goals
Don’t just think of a goal and leave it in your mind, write it down on a piece of paper or put it in your notes on your computer. I like to create large and small goals. I look far down the road for a big goal but create smaller goals for the short term to help me get there. Be sure to even log and monitor your progress as you go. When you write your goals down, it helps to hold you accountable and keep you focused.
Set rewards for when you reach your financial goals. Make sure to set them to reflect the size of the goal. Try to keep the monetary value as low as possible, it’s great that you hit your goal but you don’t want to wipe out your progress with an expensive reward. Hitting the goal should be a good reward on its own. Once you hit your goal, set a new one and get started on that. You’ll see how rewarding it seeing your finances get to where you want.
Financial goals final thoughts
Setting financial goals is an important step to getting you where you want with your finances. If you don’t set goals, you will just be going down a blind path with no destination in mind. It is important to set small and large goals and slowly work towards them. Never get discouraged and continue to work hard. Tightening up your finances is no easy task but the rewards are huge, so it’s important you stick with it.