Money is one of life’s biggest stressors. Putting in the effort to set financial goals will not only give you peace of mind but will also set you on your path to budgeting and saving more money which can be used to secure your future.
Budgets are often quite intimidating to some people and may feel like they are no longer in control of their money. Though budgets are a great way of gaining control over your money, it’s all about learning how to work with it rather than allowing it to govern you.
So, by setting realistic financial goals, you will be able to save more money. But if you don’t know where to start, or are struggling with your next steps, this guide will help you.
Write Your Goals Down
There’s something innately therapeutic about writing down your financial goals that make them feel more real. When you write your goals down, you’re actively taking steps to commit to them.
Writing down your goals is also a key way of getting you to think about what you intend to achieve. It also helps you to be clearer with your intentions for the future.
Noting down your financial goals will help let you evaluate your spending habits and implement changes. However, you should also write down the steps you are planning to take to get yourself there.
And while you may not be able to commit to an exact timeline you can make a generic guess about when you hope to accomplish the goal. This could be something as simple as “in a year from now.”
Select A Realistic Goal Length
Once you have determined what you want your goals to be, you must now figure out how long you want it to take to fully achieve them. This can be a matter of months or years, depending on the type of goal you have made and your financial situation.
For example, if you are planning to go on your dream vacation during a specific time of year or are saving up for your wedding, you may be bound to save up a set amount of money by a specific date.
By setting a realistic goal length, you have lots of flexibility.
Short Term Goals
These are goals you want to happen in a short amount of time. This could include anything from making home improvements to purchasing new furniture for your home. You might also want to pay off a credit card, reduce your spending, or even learn how to control impulse buying.
These may take a couple of years to complete and might include paying off a loan or saving up to buy a house. With mid-term goals, you have the freedom to think of an additional stream of income to get you to your goals quicker. Set aside a percentage of your monthly wage towards these goals.
Long Term Goals
Long-term financial goals will last for a significant portion of your life, such as saving towards retirement, paying off your home, or aiming to be entirely debt-free. You might even just want to put a large amount of money aside to act as an emergency fund. The more money that you can put away each month, the better your long-term funds will be!
Create A Budget
You won’t know exactly how much money you are spending if you don’t track your monthly wage, your outgoings, and your spending habits.
A budget will help you to gain control over your spending and finances. If you’ve decided on a specific goal that you hope to accomplish within the next couple of years, you must pay attention to and record all of your spending.
Budgets can be a difficult topic for some. Maybe you don’t earn as much money as you’d typically want to, or you’re a serial spender who doesn’t know what the concept of a budget is.
Whatever the situation may be, you must think about what you can realistically afford. Being honest with yourself is one of the most crucial parts of successful budgeting and could also lead you to achieve financial goals.
Take Charge With A Budget
Taking this step puts you back on track in terms of the money you have and the way you are spending it. This also gives you the chance to observe how much money you have coming in, and where and how you’re spending it.
If you are living without a budget, you likely don’t have any idea how much you’re spending on random things such as books or meals out. But making a record of all your spending will quickly highlight the differences between your income and outgoings!
Be prepared to face the harsh reality of your spending habits. It may not be pretty!
Types Of Budgets
- Comprehensive budget – if you have time, effort, and discipline, this is the budget for you. This requires extreme limitations on your spending and will completely alter the way you approach your finances.
- Planning budget – this is for instances where you are planning to spend lots of money for a particular event. Usually, this is the perfect budgeting technique for weddings.
- Problem-solving budget – this is a backup emergency fund that you can dip into as and when it is needed. If you’re able to cut out your daily coffee from a local coffee shop, put that money into your problem-solving budget instead.
Prioritize Your Goals
Determining what goals are most significant for you in your personal life is a crucial part of achieving your financial goals and saving more money.
You must prioritize and commit to your tailored goals once you have set them, otherwise putting in the effort will be pointless!
Remember, don’t beat yourself up if your goals or circumstances change. Things that are most important to you now might not have as much significance in a couple of years. Or, you may find yourself lumped with sudden debts or financial burdens that you didn’t account for when initially creating your financial goals.
If this is the case, you should have a little flexibility to deal with these situations as they arise. Instead, you should select another logical financial goal to work towards.
This will keep you on track while also providing you with the tools to save more money and achieve more of your financial goals.
Pay Off Your Debt
Another thing you can do to achieve your financial goals and save more money in the process is to pay off outstanding debts as soon as possible.
This could be something as simple as making sure that your phone bill and credit cards are completely paid off, or could be more complex like paying off student loans or a mortgage.
Whatever the debt is, whether it be short or long term, it’s always best to set up a financial plan so you can pay it off as quickly as you can.
These are some of the steps you can take to achieve your financial goals and saving more of your money at the same time. You don’t have to complete all of these steps, and should instead take some time to evaluate what will benefit your financial situation the most.