On the last day of 2017, just as I was thinking about how the year went by and what I wished to change in the year 2018, I realized that all my New Year resolutions had been largely focused upon personal growth. 2017 was the year when I promised myself to focus more on my career and physical health. But at the end of the year, while looking at my accounting statements, I started thinking seriously about the status of my financial health besides the physical well-being.
Although I was making money and I wasn’t spending too much of it, I wasn’t too happy to find out that my savings weren’t as much as I planned it to be. I actually had to go through my bills and receipts to know where the money actually went. I found some unplanned expenses that I realized I could do without. I was desperate to be stricter about my finances and to turn things around for the better.
I wanted to change how I approached my finances in 2018. So at the beginning of the year, apart from setting some self-improvement goals, I also made a list of financial goals that I wanted to achieve by the end of the year and also five years down the line. I must say that the habit of setting financial goals has helped me a lot in taking control of my finances by keeping me focused on saving money rather than going on a spending spree. I keep revising my money goals every now and then to accommodate for changes in the financial situation and my finances have never been better.
The most important lesson that this whole exercise has taught me is that my finances will be directionless without any financial goals in sight. So if you don’t have a list of financial goals yet, now is the time to make one. Here are a few money goals that you can set today for a better tomorrow:
1. Make A Budget That You Can Live By – I always thought of budgeting as a tool that would control how I choose to live my life. I only got serious about setting a budget when I came across people who were actually seeing positive results by following a monthly budget. While you may keep working towards your long term financial goals, budget is the most important thing that can keep your short term financial goals in check. It gives you a clear picture of how adequately your income is being utilized while helping you manage your expenses month on month.
2. Keep A Track Of Every Penny That You Spend – I started managing my money at the age of 17 and made it a habit to write down every penny that I spent in a tiny notebook kept for the purpose. As time went by and life got busier, it became hard to maintain the habit but I still keep a rough account of my expenses as it helps me know where my money is going. Keeping a track of your expenses will help you know your weak areas when it comes to spending and can push you towards a healthier money mindset.
3. Pay Down Your Debt – If you are looking towards living a financially peaceful life, make debt repayment your foremost priority. Make it sure to build your lifestyle around this one goal until you are debt-free and in a position to focus more on your long-term goals.
You can start by making a debt-repayment plan to get rid of all your loans at the earliest. Decide on the amount of debt that you would want to repay during the next one year and adjust your finances in a way that allows you to fulfill that goal. Not only will it secure your future, but will also help you gain peace of mind and a good night’s sleep.
4. Build An Emergency Fund – Given the uncertainty factor that comes with life, it’s always good to have money saved up in an emergency fund that can pay for at least six months of your expenses. If that sounds too much, you can start with a $1,000 and add more to it slowly and gradually. This emergency fund will provide you a financial cushion against all the things that can possibly go wrong – a sudden job loss or a pay cut, a medical emergency or an unexpected home/car repair.
5. Live Below Your Means – Savings should be your primary money goal until there’s enough money in your savings account. The most practical and obvious way to build your savings is by spending less than what you earn. If you wish to save money that can provide for your retirement and other long-term goals, cut your spending as much as possible. If you want to read more about the real ways to try and live below your means, here’s an article that can help.
6. Work Towards Improving Your Income – A friend of mine, who recently got promoted to a better paying job, told me how it was hard for him to make the cut. A few years back, he had told me how he wished to earn more money but he didn’t want to go back to the University for a Degree. Through the years, he worked hard and took up new challenges to gain more skills that could help him get promoted to a higher position.
If you think that you aren’t earning enough to finance your long-term financial goals, try switching to a better paying job or start a side hustle to start making more money.
Financial goals can be your mantra for financial success besides keeping you on track towards those big money milestones. After all, saving money gets much easier when you know that there’s a goal in place that you want to achieve. You are bound to be more frugal when your biggest money goal is to save money for your children’s education or to buy a house in future. Remember that it takes work to reach your financial goals but before that, you need to give your money a purpose by setting some very important financial goals to be achieved in the future.