Setting Financial Goals
When it comes to getting your finances in order, there are lots of things that need to be done. Figuring out which ones are most important and getting everything accomplished can be hard if you don’t have achievable financial goals in place. Here are a few steps to help you get started with the goals on your road to financial freedom.
Identify the Big-Picture
Before you can set any goals, you need to first know what you are trying to achieve. If you are trying to get out of debt your goals to get there will be different from someone who is debt-free and instead is saving to buy their first house.
Make it Reasonable
Once you know what you want your end result to be, you can begin setting goals. Look at your budget, or if you don’t have one create one, so you know what you can reasonably accomplish within the time frame you determine.
One of the biggest mistakes people make is to set goals that are unachievable or unrealistic. Not meeting your goals can make you feel disappointed and may make you want to give up on reaching your end result.
Break it Down
Now that you have your reasonable goal in mind, you should consider breaking it down into smaller sub-goals. For example, if your goal is pay off $X of debt in one year, how much should you be paying off each month in order to hit your yearly target?
If this smaller goal looks unreasonable, you may have to make adjustments to your overall goal to make it more achievable.
Make a Plan
With your big picture goal and your smaller bite-sized goals in place, the next step is to make a plan with actionable steps for achieving your goals.
If your goal is to pay off debt, make your debt payments a priority over other spending by scheduling payments to come out of your account right after you are paid, before you’ve had a chance to spend your money elsewhere. Another actionable step if you have multiple streams of income is to put any “extra” money you have at the end of the month toward your goals as well.
With your goals and actionable steps mapped out, now you need to find a way to make yourself, and your actions, accountable.
You could tell a close friend or family member about your goals so that they try to help remind you to rein in spending in favor of your meeting your goals.
Another way to hold yourself accountable is by creating a blog or writing in a journal. Both of these options give you the opportunity to stay anonymous and avoid letting your friends or family know about your financial situation, while still providing accountability. If you know you can successfully be accountable to yourself, a diary might be just what you need, but if you struggle with self-accountability and want to remain anonymous, an online blog may be the way to go.
As you work toward your end result, give yourself credit for the things you do correctly and successfully. This will help keep you motivated and help you to continue to want to work toward your goals. Add a small treat into your budget every now and then after you’ve made some good progress that you want to celebrate. You don’t want to go over the top with your celebrations and set yourself back from reaching your goals, so make sure the amount you choose to spend on these treats is reasonable.
Getting your finances in order can seem like a large tasks, but by identifying your big-picture goal, breaking it down, identifying specific actions, finding accountability, and celebrating your achievements, you can accomplish anything you set your mind to.
What are your financial goals?
Photo courtesy of: Equipe Integrada
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