Throughout your lifetime, you will always be saving up for something… whether it’s a bag, car or a house, these wants and needs all start as a goal.
Make a Plan for Your Money – Set Goals!
Making a plan and setting goals is the single most important step to achieving improved financial health. “If you fail to plan, you plan to fail” isn’t a saying for nothing.
Be SMART About It!
To give yourself the best chance of sticking to your financial goals, they must be S.M.A.R.T – specific, measurable, achievable, realistic and time-bound. Once you have your SMART goal in mind, you can create a plan for how you’ll achieve it.
For example, if you want to pay off your $5000 credit card debt by the end of the year, work out how much you are able to allocate to your goal each day/week or month. By breaking your goals into smaller, more manageable pieces, you will find the difficulty factor you have given to them decreases rapidly!
Specific: I will pay off my credit card balance of $5000 before the end of 2021
Measurable: The current balance is $5000; I will make monthly payments of $420 until it is paid off.
Achievable: I have 12 months of 2021 to pay the total, I know that I make X amount per week and I can use any extra from my tax return in July to cover any extra interest or make another payment.
Realistic: I’d love to pay it all off tomorrow, but that isn’t realistic. Based on my budget and discussions with my local financial adviser I am capable of paying $550 per month but have left a buffer for extra savings or unexpected expenses.
Time-bound: I will have it paid off by December 31, 2021.
Achieving Your Goals
Setting tangible and realistic goals; as well as following them up and tracking your progress, are fundamental practices to achieving desired success in anything.
Financial goals can be broken up into 3 sub-categories – short-term, mid-term and long-term. Figuring out which sub-category your financial goal falls under is the first step to setting up your goal. The next step is to determine how much money you need for it. Then, create a budget to regulate a percentage of your income to go towards a saving account for the financial goal. Now, you might have more than 1 goal, so you must prioritise each of your financial goals.
It is easy to enjoy spending money… it is used as a luxury and obscures any foresight of the future. This is why financial goals are so important. Setting financial goals will help you figure out what you are trying to achieve. You will better be able to define your own success!