Setting financial goals for your future
12 July 2019
Managing finances is always problematic and in today’s tough economy most of us are struggling to just manage day-to-day expenses. As we start our careers, we often have a tight income with little perception of progress. Young adults who have just started earning often struggle to manage their finances and handle their expenses. With every passing day, desires become higher, goals become bigger and the cost of living increases. To ensure that you effectively manage your money and don’t fall into a debt trap, you need to prioritise. The best way to plan your finances properly is to set short and long-term financial goals.
Why do I need to set financial goals?
Setting goals is a very powerful skill in managing your money. Goals give you direction on the way forward. A goal gives you something to focus on and a plan as to how to manage your income and expenses. They give you the motivation to live, and spend, in a well-managed way.
Step by Step Guide on how to set your short term and long-term financial goals?
When trying to manage your expenses more effectively, it is very important to set short and long-term goals. To get you started, we have some guidelines to help you get with setting your short and long-term financial goals:
1. Set your goals or identify your objectives
If you want to manage your finances, then the very first thing that you must do is decide your goals. Start your financial plan with clear goals. Define what you need and how you can achieve your goal. Think about how much you will need to save on a regular basis and what are necessary expenses versus what are luxury expenses. You need to decide what your budget limits are to know how to manage them effectively. Once you know this, you can then decide on your goals. Next, define your objectives clearly to start your plan that will help you in realising your financial goals.
2. Identify the required financial needs
The second step in the process of setting your short and long-term financial goals is to identify your personal needs and the money required to fulfill these needs. You should have an idea about the specific amount of money that you need to fulfill your daily requirements, what you need to survive. These daily requirements may include food, transport, rent and medical bills. If you are living alone, then it may become easier to identify your needs and the money required to fulfill them with ease. However, if you are living with family, then you need to determine the expenses of each family member and add it all up.
3. Try to improve the saving habits
This step is really crucial as you work towards achieving your goals. Avoid buying unnecessary things that you don’t really need. Start with making an estimate about how much money you can save on a monthly basis by limiting your expenses to just buying what you really need. This habit can help you to improve your saving habits and will help you with achieving your financial dreams.
4. Track your investments regularly
The next, and best strategy, in the process of setting your short and long-term financial goals is to track your investments on a regular basis. By investing any savings you might have, you will grow your savings by earning interest and dividends on your investments. When investing, it is important to remember that investments are a long-term commitment and you must therefore not alter your investments due to stock changes. If you have the ability to control your income and expenses in a better way, then your goals will become closer.
5. Manage your budget
To plan a budget is the most important step in this entire procedure. If you want to invest, then a better budget plan can be beneficial for you. Such as if you want to travel and are unable to fulfill your desire then it will be the best option for you to plan a budget for this and start saving. In this way, you can achieve any of your desires with ease.
6. How to become a good investor
To achieve any of your short or long-term financial goals you should make proper investments. You may hear different experiences of well-known people and how they succeeded in the business industry. Based on this information, you need to determine your own skills and limits and then decide whether the investments will be beneficial for you. Do proper research, explore your capabilities and determine the best plan for you. It is important to fully research possibilities and determine their risks before deciding whether they can help you to earn more.
7. Plan the best strategy to achieve your defined goals
The last step in setting and achieving your desired goals is planning and implementing a proper strategy. By actually writing down your goal and the strategy as to how you will achieve these goals, you are committing to them.
The strategy must include all of the above steps from identifying your goals to the proper investment plans. In your strategy, identify how much commitment and money is needed for your goals to be achieved and how much focus and work is needed to fulfill these goals. Your strategy may incorporate a number of people and services and should detail how you are going to manage all of these in an effective way. Review your strategy on a regular basis to keep yourself on track towards both your short and long-term goals.
Setting financial goals is easy, but achieving these goals requires commitment and dedication. Having a detailed strategy that provides a plan as to how you will achieve these goals can make them easier to achieve.
To learn the essential skills needed to be able to set short and long-terms financial goals in as you work towards achieving financial freedom, register for the short online Money Essentials course. This course will help you to set goals, draft a budget and understand the importance of a credit score.
Click here to register for the Money Essential course.