5 Tips for Financial Goal Setting
November 21, 2018
The first step toward achieving healthy finances is setting goals. Whether you want to save for a vacation or are thinking more long-term—like buying a house--having goals in mind will help you stay on track to reach your destination faster. Here are five tips to set financial goals to make your future better.
- Create a budget and live by it. Focus on the amount of money coming in each month and the amount of money going out for bills and other expenses. Track everything you spend money on! When you see how your money is spent, it helps you create a budget that sets expectations that are easy to manage.
- Make each goal SMART: Specific, Measurable, Attainable, Relevant and has a Timeline. As you define your goals, prioritize what is important and what you can realistically achieve. Be sure to set a time frame to reach both your short and long-term goals. To make sure your goals are relevant, connect each one to something you really want to accomplish, such as; buying a house, going on vacation or paying off debt. This gives you even more reason to stick to your financial goals. Then review your goals periodically and make adjustments to make sure you stay on track.
- Pay off credit card debt – completely. The great thing about this goal is that anyone can do it, regardless of income. If you have high interest credit card debt or several different credit card bills to pay every month, it may make sense to take advantage of a 0% APR balance transfer offer. With this type of offer, you could transfer the balance on your high interest credit cards to save money on the amount of interest you are paying.
- Start an emergency fund. Having an emergency fund can make any unexpected problem a lot easier to solve. An emergency fund is money set aside exclusively to cover the cost of unexpected events such as major car repairs or a job loss. Saving enough money for three months of expenses is a good starting point, but six months is even better. Think of your emergency savings as your personal safety net--it offers peace of mind when things are good and a plan to defend against financial ruin if things turn bad.
- Set up automatic savings. It is easier to stay on top of saving money if you don’t have to think about it. The best way to do this is to set up an automatic savings plan. You can have money from your paycheck deposited directly into your savings account-- and you won’t even miss it. Just make sure you don’t check the account too often as that may tempt you to spend the money you’ve worked so hard to save.
Setting good financial goals and having a realistic plan will help you reach your goals of financial independence. Remember, reaching your goals will take time and some discipline, but it’s never too late to get started.