How to Set Important Financial Goals and Achieve Them
- Decide what your priorities are. Priorities come in all shapes and sizes, from paying off debt to saving for a bike. Only you know what means the most to you and it’s about time you did something about it. Start with a few short-term and long-term goals that will help improve your future. Having a specific goal will help to keep you focused and motivated. It doesn’t have to be easy, but your goals should be possible and achievable.
- Track your habits. Start by looking at your current spending, before making a budget. It is easy to say, “I will only spend $300 on food a month” until you realize that you actually spend $500. Seeing your current spending habits helps you set more realistic goals. For instance you know you spend $500 but you can cut out your daily soda or start taking lunch to work to reach an easier goal of $400. List out all of your fixed expenses and any additional habits you see along the way. Be honest and upfront as it will make it easier to not only budget but also know your habits. Not every habit is bad either. It can be encouraging when you start to realize how often you actually do opt for smarter spending already.
- Create a budget. Budgeting is an essential part of reaching your financial goals. Group your spending into three categories: fixed expenses, financial goals and variable expenses. Now take these expenses and compare them against your income. Is there money left over or are you in the red? No matter where you land on the spectrum, there is always a possibility to free up cash by dialing down your expenses or creating more income. Now that you know your current spending and your goals, it is time to decide how you’ll track your monthly progress. You can’t manage what you don’t measure. Create a system to track your progress, whether that be in an online tool like our Internet Branch online banking or in an excel document. It is a best practice to track where your money is going and make sure you are following your budget.
- Take actions to reach your goal. This is where your knowledge of tracking your old ways will also come in handy. You can vow to yourself that you will start making your own food because it will help you save up for that trip to Europe. Thinking about that trip to Europe will help curb your spending habits. Choosing a mantra like “every dollar counts” will come in handy when you want to order takeout. Another simple action can be automating savings for an emergency fund. Be sure these goals have a deadline and specific amount so you can see if you are on the right track. Know what your account offers and don’t forget to factor in dividend rates/annual percentage yield.
- Spot offenders. Don’t be ashamed. We all fall back into our old ways. The true sign of growth is realizing what your mistakes were and deciding what you can do in the future to be better. If you have a problem area, try taking out cash control your spending. When it’s gone, it’s gone.
- Breath. Revise. There are bound to be bumps along the way and you will need to adjust as you go. Finding your financial balance takes time, but in the end, can be very rewarding.
Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.