Are your financial goals just not coming together? Don’t feel bad; many others face similar difficulties.
Financial goals need to be set with specificity, measurable progress and relevance in mind. Setting your own or working with a professional, it is vitally important that your progress be regularly evaluated.
1. Set Specific Goals
Setting financial goals may not be simple, but they’re key for moving forward and staying on course. When setting financial objectives, make sure they’re specific, measurable, attainable and relevant if possible.
Starting out by taking a thorough inventory of your current financial situation and prioritizing what matters most to you. Things such as stability, paying off high-interest debt and building an emergency fund could all be priorities.
Once you have created your priority list, divide your goals into those that can be accomplished quickly and those that will take more time. Make a timeline for each goal including when you wish to meet it; this will help determine how much savings are necessary each month in order to meet these long-term objectives. A typical timeframe for short-term goals would be within a year while mid-term ones usually span one to five years and long-term ones take over five years before completion.
2. Create a Budget
Establishing and following a budget are vital steps towards realizing your financial goals. While it may prove challenging at first, doing it over time will yield positive results.
To create a budget, it is necessary to identify both your income and expenses in order to accurately predict how much money will remain at the end of each month.
Next, categorize your goals as short-term, mid-term and long-term. Short-term goals tend to take under one year for completion – such as saving for emergencies or paying off credit card debt – while mid-term objectives span three to ten years and are used as building blocks towards larger long-term objectives like paying off the mortgage or saving for retirement.
3. Create a Savings Plan
Organization and making the appropriate financial decisions are keys to reaching your financial goals, yet sometimes it can be confusing as to where to focus first – such as whether to pay off debt or save for that dream vacation? That’s why the 7 Baby Steps provide a clear pathway toward better finances in your future.
First step to reaching financial success is defining your individual financial goals and creating a savings plan. Make a list of goals with specific time frames attached – short-term ones should take less than one year while mid-term objectives typically last three to 10 years and serve as stepping stones towards long-term objectives. To stay motivated, ensure your goals align with both your values and future visions.
4. Make the Right Decisions
To reach your financial goals successfully, it’s vital that you make informed decisions. To start off on the right foot, this includes clearly articulating what values matter most and creating a vision of where you see yourself headed in future years. In addition, setting short-term and mid-term goals (like creating an emergency fund or paying off debt or buying a car within 12-18 months respectively). Mid-term goals typically encompass investments or saving for a house purchase as these typically take three to five years before reaching fruition.
Long-term goals extend out more than 10 years and include objectives such as saving for retirement or reaching early financial independence. When linked with specific motivations, long-term goals can help you meet them faster and more easily.
5. Track Your Progress
Tracking your financial progress is an integral component of reaching financial goals. Tracking helps you see just how far along you are in reaching them, while providing additional ideas about what steps could help make further gains.
Setting SMART goals (specific, measurable, achievable, relevant and time-bound) can help keep you on track. Setting these goals on auto-pilot may also ensure they don’t slip away.
Example: Consider setting up automatic deposits into your savings account each time you get paid so it won’t require as much mental effort when meeting financial goals. Technology also can assist with automating tasks like debt payments.