|
One of the easiest ways to reach your financial goals is to start by setting some! Without documenting what it is that you’re hoping to achieve financially, you may never accomplish the financial success you’ve envisioned for you and your family.
Luckily, this post will walk you through seven easy steps you can take right now to start setting financial goals and begin working toward them. 1. Write Them Down Chances are, you have a running list in your mind of your financial wants and needs. But if they are only in your head, new ones get added or jumbled with old ones and there is no clear list of all the things you are working toward financially. Instead, list them out on a piece of paper. Everything from redoing your downstairs bathroom to paying off that student loan and saving toward retirement. And when you think of your goals, don’t limit it to only the items you can already quantify in terms of cost but also dreams of how you want to live your life. For example, if you always want to be able to take a 2 week family vacation each year, put that on your list too. 2. Prioritize Them According to What is Most Important to You Do you know why money is important to you? Is it because you want financial security or a certain status? Maybe it’s to be able to provide for your family or so that you can afford to do certain things with your time. Knowing why money is important to you will allow you to more easily prioritize your financial goals. If, for instance, it is most important to you that you are able to go on a family vacation every year, maybe the remodel of your kitchen is something you spend more time saving toward so that you can still afford your trip. Look at your list and see which goals map most closely to your ‘why’ and see if that helps you more easily prioritize your financial goals. 3. Categorize Goals Naturally, not all financial goals fall in the same category. You are going to have small, short-term goals and then the large, behemoth money goals. For example, an emergency fund is potentially something you may need tomorrow! Consider categorizing your money goals as Wants vs. Needs and Short Term vs. Long Term. Under your needs column you may have items like build up an emergency fund. Wants column might be more discretionary money to spend on entertainment each month. Long term goals may include saving for retirement and your children’s education, while short term goals may be to redo your master bathroom. 4. Estimate Your Goals Next, figure out how much money it will take to reach your goals. Knowing at least a ballpark amount will allow you to actually work towards certain goals and start saving. Your emergency fund should be anywhere from three to six months of your income to cover fixed expenses. What is the amount you need to have saved in an emergency fund? How much more money would like you like for entertainment expenses each month? What do your monthly contributions to your retirement account and 529 plans need to be in order for your to reasonably achieve your long-term savings goals? Knowing the answers to all of these questions may not be immediately clear. If you have questions, a financial advisor can help you estimate many of your long-term financial planning goals. 5. Start Once you have your goals documented, prioritized, categorized, and estimated – it’s time to start working toward them! Start executing on your dreams by saving money for your specific goals and cutting unnecessary expenses. You’ll reach your goals faster if you’re able to redirect spending in one category to the goals that are your highest priority right now. Maybe start with a small goal so that you can feel the gratification of reaching a financial goal and cross it off your list and then work towards a new one! 6. Revisit Your Goals Every 6 Months Every six months, revisit your list of financial goals and see how you’re doing. How are you doing towards achieving them and do you need to make any adjustments? Life is fluid and full of changes, so it’s completely reasonable that your list of priorities may alter from when you started due to unforeseen changes in your circumstances or a shift in priorities. That’s OK, but just be sure that you are still focused toward the goals that are important to you. You are responsible for your financial success and so much of it relies on your ability to focus on your goals and implement.
Comments are closed.
|
 Chris Hardy - CFP®, EA, ChFC®, CLU®,
|
RSS Feed
