How to Set Realistic Financial Goals and Achieve Them
Have you thought about what you want to be doing in five years? What about in 20 years? Planning and setting goals for yourself help you succeed and take control of the direction you’re headed.
The same rings true for the financial path your life takes. When you plan for retirement, emergency savings, or debt repayment, you continue moving in the right direction and are well on your way to achieving your financial goals.
Here are 6 basic steps to help you get smart with your money.
1. Financial Drivers
Individual values in life have influence on your financial decisions. Determining what you value most, as an individual or in a partnership, will give you insight into why you make the financial choices that you do. Understanding these values and what really drives your spending helps you set realistic goals and priorities.
2. Get Organized
Make managing money part of your routine. The same as you would maintain a fitness routine, or get groceries on a regular basis, you should prioritize a healthy financial lifestyle by scheduling time to focus on your finances. This includes financial planning, developing a plan with a partner or spouse, or organizing documents.
3. Know Where it Goes
Recognizing where your money goes is the first step. Write down a list of everything you think you spent money on last month. Now compare it to your bank statements and see what you really spent.
Not only does this exercise show you what you spend in a month, it also identifies areas where money may be “disappearing”. These disappearing funds often come in the form of expensive coffees, eating lunch out regularly, or other impulse purchases. Over the course of a year, they can add up to a fair amount of spending; $10.00 a day times 5 days a week adds up to over $2,000.00 a year!
4. Shop Smart
Making your money last by implementing smart shopping practices can help turn dreams into a reality. Writing a list and only buying what is on it, comparing prices, shopping sales or off-season, using cash and or coupons, or buying in bulk when appropriate are a few smart shopping practices you can implement.
5. Reduce Your Debt
Planning to reduce your debt is one of the first steps towards financial wellness. Understanding what you owe and establishing a repayment plan gives you an idea of how long it might take to eliminate your debt. Reducing expenses or getting a second job can help increase your income. Prioritizing debt repayment and determining repayment goals each month (i.e., “I can afford to pay $___ towards my consumer debt each month”) help keep you on track and accountable.
6. Save For the Future
Saving money is essential for a financially secure future. Pay yourself first by saving a certain percentage of your income before you buy anything else. To make things even easier, you can choose to have this amount automatically transferred (via your bank) into a savings account each month (or as frequently as you wish).
Starting to save money for your future and planning for retirement can’t start early enough. Regardless of where you are right now in your financial journey, you will be further ahead tomorrow if you start today.
Contact our experts at Lennox Financial today and explore your options.