How To Set and Achieve Your Financial Goals
17 AUGUST 2023
First step in setting financial goals and achieving them is making short, medium, and long-term goals. Objectives depend on what stage of life you're in.Financial goals are benchmarks for saving, investing, or spending that you want to meet over a certain period of time. What kind of objectives you want to attain typically depends on what stage of life you're in.
If you're at university, for example, it may be a simple short-term goal like saving for a new pair of shoes or something more difficult like saving for a car. A couple with a growing family, on the other hand, would have a long-term objective of moving from renting to purchasing a home.
A crucial first step in setting your financial goals and achieving them is making a list of short, medium, and long-term goals. If you don't have a goal in mind, you're more likely to overspend. If you don't have enough money to cover unforeseen expenses, you'll be in trouble. A good way to get going is to use the SMART strategy. Are your financial goals Specific, Measurable, Achievable, Relevant and Timely?
Start with the short-term goals
B is for budget
Budgeting is planning. Budgeting isn't only about knowing where you are in terms of your finances. You will save money as a result of this practice. Try to be even more rigorous with yourself or make more sacrifices so that you wind up saving money each month if you aren't already saving.
Prioritise higher interest payments
Making minimum payments on all except the highest-interest-rate accounts is a good technique for paying off credit card debt. Make additional payments on your highest-rate credit card with whatever extra money you have.
Create an emergency kitty
Whenever you can, increase the size of your emergency fund, so that you are able to handle more serious financial hardships, such as unemployment. Before the COVID-19 pandemic, if you didn't have an emergency fund, you probably wished you had. A backup supply of money is always a good idea.
Improve that credit score
Simply put, a higher credit score saves you money by allowing you to qualify for cheaper interest rates.
Then move on to the medium-term goals
Objectives such as purchasing a first house, are examples of medium-term goals. Perhaps you currently own a home and want to improve it with a renovation, or you want to start saving for a bigger house. Once you've decided on one or more of these objectives, figure out how much money you'll need to make a dent in them. The first step toward achieving your desired future is to visualise it.
Finally tackle the long-term goal
Most people's most important long-term financial goal is to accumulate enough savings to support themselves in their golden years. Calculate how much money you'll need each year when you're no longer working. With your short-term financial goals in mind, your budget will give you a good indication of how much money you need. In retirement, you may have to budget for more medical care.
Still not sure what to do? Here are a few guiding steps:
- Determine what is important to you. Place everything on the table for review.
- Sort out what's achievable, what will take some time, and what has to be part of a long-term plan.
- Get a good grasp on what's coming in and out, and then use it to achieve your objectives. Make use of your budget to repair any cash leaks.
- Your strict, realistic, and impenetrable budget will reveal at least a few extra bucks. Have that sum automatically sent to a separate account that will be used to take care of the first few items on your priority list.
Through it all, keep an eye on your progress. Check to see whether you're meeting your goals. If this is not the case, take some time to reconsider what went wrong and adjust. Good luck!