Whether you’re looking to buy a home or get rid of debt, you’ll need to set your financial goals. This allows you to have clear objectives that you are working towards in the short-term and long-term. So here are four tips to help in setting your financial goals.
Clearly define your goals
The first step to setting your financial goals is specifying what you hope to accomplish. These goals must be specific, measurable, and have a set deadline. For example, paying off your student debt of $15,000 by the end of next year is a great financial goal to strive for. Setting vague goals, such as just having more money, will likely not give you an end goal to aim for, which makes it easy to lose sight of what you are working towards.
Make sure your goals are achievable
It is always good to challenge yourself, but setting financial goals that are too extreme means, you’re likely setting yourself up for failure. It is also common for those still starting out on their journey to financial freedom to become overwhelmed by setting too many financial goals at the same time. Therefore, it is advisable to take small but consistent steps towards your goals instead of trying to achieve them all at once. As you start achieving these smaller goals, you can progressively begin taking on more challenging ones.
Figure out your budget
Before rushing into achieving your financial goals, you must first figure out where you stand in terms of expenses and spending habits. This means establishing a budget to track your spending and see where every dollar is going. A budget makes it easy to identify opportunities for saving money and how much you can have left over at the end of each month. From there, you can get an idea of what financial goals are doable and how long it would take to achieve them.
Monitor your progress
Since your goals will often have a set deadline or timeframe, you should constantly be monitoring your progress and adjusting your goals as you go along. When you go through a significant life change of any kind — moving, a new job, starting a family or buying a home — that is a key time to re-evaluate your finances and revise your goals. And of course, there may be some unexpected bumps in the road that can hinder your progress. Those, too, require a new look at your money, how you are spending it and how you are saving it.
Above all, keep one single goal in mind — retiring young? buying land and building your own home? starting your own business — and make sure you spending and saving habits are always pointed in that direction. Long-term planning, more often than not, yields long-term results.