Setting feasible financial goals is a crucial step in your personal financial planning process. It allows you to become in control of your finances, allowing you to have a healthy relationship with money.
In a nutshell, three types of financial goals form the basis of a holistic financial plan – long-term, short-term, and intermedial. And as you set these goals, it’s crucial to align them with your values and personal objectives.
However, it’s perfectly normal to feel overwhelmed with making financial decisions on your own. To help you with your financial motives, here are some valuable tips you may try out.
7 Tips To Consistently Achieve Your Financial Goals
1. Set SMART Goals
Before anything else, it’s vital to set financial goals because these will help you stay on the right track. By setting clear objectives and action plans, you can successfully apply your time and resources to make the most progress. Upon setting financial goals, make sure that they follow the SMART format:
Specific – well-defined, clear, and straightforward;
Measurable – with clearly defined criteria to measure your progress toward achieving your goal;
Achievable – attainable and highly feasible to achieve;
Realistic – within reach and relevant to your end purpose;
Timebound – with a specific timeline, including a starting date and target date; this creates a sense of urgency.
2. Categorize Your Money
Instead of spending your money irresponsibly, you should categorize your funds into three categories: fixed expenses, discretionary expenses, and savings. By paying attention to your finances, you can assign every dollar to their respective financial categories, preventing it from slipping through the cracks.
Fixed expenses refer to purchases that you need to incur in your daily life. Some common examples are:
- Home and utilities
- Food and groceries
- Bills (electric, water, etc.)
- Health and personal necessities
On the other hand, discretionary expenses are purchases that aren’t necessary but improve the quality of your lifestyle. These are:
- Memberships (gym, streaming services, cable, etc.)
Savings refer to the money you set aside for future use rather than spending it immediately. Some of the most common forms of savings are:
- Emergency savings
- Retirement savings
- Health savings
- Short-term savings
3. Save The Raise
Now that the business industry is at its most competitive phase, organizations often provide salary raises to their beloved employees. Although it’s normal to fantasize about the new smartphone or car you can get from the raise, these things add up. So whenever you get a raise at work, it would be best to save some of it to achieve your financial goals consistently. By doing this, you’ll continue to live the same lifestyle while accumulating more funds for your financial purposes – for emergencies, travel, or retirement.
4. Take Advantage of Monthly E-Transfers
Although it’s relatively easy to set smart financial goals, the difficult part is doing it. To make it easier on your end, set up a monthly electronic transfer from your paycheck or checking account to your savings account. It doesn’t have to be a considerable amount, just enough to jumpstart your journey toward having decent savings.
5. Prioritize Your Needs Over Your Wants
Now that almost everything is within an arm’s reach, the line between needs and wants becomes blurry. Sometimes, it isn’t easy to distinguish which expenses belong in which category.
However, you shouldn’t engage in impulsive buying of unnecessary items. Discipline is one of the most crucial factors in achieving your financial goals, so think about a new purchase for several days to assess whether you need it or not.
Indeed, it’s better to have an older phone than be in debt because you can’t fund emergency expenses.
6. Make Your Money Work For You
Have you ever seen a rich person who works hard for money? No, because they make their money work for them instead. Stop viewing your earnings as spending cash and start building assets by investing. And don’t worry because, in this day and age, there are numerous ways to do so – stocks, real estate, cryptocurrencies, gold, and more.
However, doing proper research before partnering with a company to manage your funds is essential. Although it might be tempting to go for a company that promises high returns, doing a background check on the organization you’ll invest with is still crucial.
Moreover, you should never put all your eggs in one basket – make sure to broaden your investment portfolio. Doing so will minimize the risk of losing your savings.
7. Reward Yourself
Although it’s crucial to stick to your budget, treating yourself from time to time is still important, especially whenever you achieve some of your financial goals. It could be a material or experiential reward – make sure that it’s something you genuinely want.
By constantly rewarding yourself for each financial goal, you’ll become more motivated to achieve more of your plans. Plus, it will make the journey more enjoyable.
In this day and age, just having big dreams and good intentions isn’t enough. If you want to succeed in life, you must understand that your finances play a huge role in determining your future – that’s why it’s essential to have financial goals to guide you.
No matter your end goal, proper financial management is critical because it adds an additional layer of protection against financial emergencies and unexpected expenses. Moreover, it helps pay off debt and save funds for adverse obstacles in the future.
Remember: if you’re dedicated to accomplishing your financial goals, you must have ample discipline in your system.