Financial planning is the process of determining where you are now, where you want to go in the future, and developing a roadmap to help you get there. Having a financial plan can help alleviate financial stress and better prepare you and your family for a bright financial future. With a plan, you can make the most of your assets and help ensure that you meet your future goals. When you are determining your plan, it’s important to not only outline what goals are most important to you, but also what steps you need to take to ensure you meet these goals.
Why Setting Financial Goals Matters
Setting financial goals is important but you may be asking yourself why? Well, outlining these goals is essential to financial success. Once you’ve set these goals you can then write them down and follow a roadmap to realize them. It helps you stay focused and confident that you’re on the right path.
What are you trying to achieve and how will you define success? Setting goals will help you answer these questions. Your answers will be unique to you and help you determine what your end goal is and the necessary steps to get there. Setting goals can also affect the way you make decisions about your career. For example, if you set ambitious goals, then you might start thinking about how much time you can afford to take off or what you need to do to get that promotion you really want. By keeping your mind on the prize or the end goal, you can help yourself stay focused. This will help you stick to your guns when tempted to splurge on something you don’t need.
It may seem as though your financial goals can be a long and drawn out process but setting goals is the very first step. Think about writing them down to begin with so when you’ve achieved them, you are justified in congratulating yourself. It’s an accomplishment in itself starting out on your new financial journey and especially surpassing your first hurdle.
Short Term Goals
First things first, you have to differentiate between the type of goals you want to achieve. Let’s first dive into short term goals. Setting short-term financial goals can give you a confidence boost and build the knowledge you need to achieve larger goals that tend to take more time and effort. Getting started on short term goals can oftentimes mean sitting down and creating a budget. Timelines for these goals may vary, but these are things you’ll spend money on generally within a few months or years. A few examples of short term goals are:
Clear your overdraft
Get out of credit card debt
Be able to eat out more
Save up for a summer vacation
Create an emergency fund
Long Term Goals
Long term goals are usually your big-picture costs and are called that because they take time to achieve. These goals may take several years or even decades to reach. Additionally, these long term goals typically involve more money and regular attention compared to your short term goals. When it comes to long term goals, some people aim high and have their mind set on achieving complete financial independence and stability or others might want to own their own home or afford to give up work and travel. A few examples of long term goals are:
Create a retirement fund
Pay off a mortgage
Start your own business
Save for your child’s college tuition
Creating A Plan
What Can You Be Doing Now to Achieve Your Goals?
So now that we have covered the two different types of financial goals you can set for yourself, the question on your mind might now be what can I do now to achieve my goals? You can always outline the goals you want to achieve but that should also come with a solid plan for reaching them. If you are serious about your financial goals it is more important than ever to take proactive steps in pursuing your strategy. It doesn’t have to be complicated and that’s why we outlined a few tactics that will help you:
Write out your goals. This might seem obvious but the reality is that you won’t do them if you don’t write them, speak them, and see them. So do it.
Create accountability. We recommend finding someone you trust to talk through your goals with. This person can give you a reality check along the way and offer encouragement.
Budget. Having a budget gives your financial goals direction by giving your money direction. This is your opportunity to tell your money where to go and make it work just as hard as you do.
Track your expenses. List out your monthly expenses under two categories: fixed spending which includes bills and then discretionary spending which is any non essential purchases you make. By listing out your expenses, you can review each purchase and determine what you can spend less money on. The more money you can free up, the more you have to save towards your goals.
Become more self aware. One of the most important tips to consider is becoming more self-aware. Know your money weaknesses and set up a plan to avoid or overcome them. On the other hand, knowing your money strengths is equally important as you build on them as you celebrate every victory.
Financial goals give a voice and direction to your dreams. Whether it’s a new year, a new month, or a random day and you’re feeling motivated to change - you can do it. Reaching your financial goals can be daunting but not impossible. With a little organization, focus, and determination, you can achieve your goals and Brink’s Money will be here cheering you on.