Why Are Financial Goals Important?
Sometimes, it can feel like money holds power over your life. After all, we depend on a steady income for many things, from everyday living to creating new experiences. But it’s not until you strive for good financial health that you realize you are the one in control of your money. Financial goals can help you change the way you view money and remind you that a swipe on a credit card may seem small, but in reality, it plays a bigger role in the picture.
Take this, for example. A daily pitstop to the nearest coffee shop might cost you only $5 a day, but multiply that by five workdays and four weeks--all of a sudden you’re spending an extra $100 a month on your daily commute to work! Mindless spending can be addicting and creep into many aspects of your life. That’s why it’s time to hit the brakes on overspending and shift gears to better financial living.
If you want to get on the road to financial freedom, then it takes hard-set financial goals (and ditching the daily coffee stops) to get there. Here are some ways to change the way you think about money, and how you can make small lifestyle changes to see bigger savings.
First, Develop a Financial Goal Chart
Taking mental notes for financial goals is a good start, but it’s not ideal for long-term success. The first step to encourage change is to build a financial plan. Here are five steps to help you get started:
- What is your top financial goal? Make it measurable, action-driven and realistic. Set a timeline for when you want to achieve it and set specific milestones along the way.
- Is your goal short-, mid- or long-term? Be sure to choose a timeline that aligns with the size of your goal.
- How much money do you need to reach your goal? Set mini-goals every week, month or year to help measure your progress.
- How can you save for your goal? Whether it’s cutting down expenses or earning extra money, have a plan in place.
- Which method is the most effective for you? Experiment with different methods and find what works best for you and your lifestyle.
The key is to start small and grow big. Once you find your footing in this financial journey, the confidence and motivation will follow.
3 Financial Goals to Help Get You Started
Go From Paycheck-to-Paycheck to Monthly Savings
Did you know over half of Americans live paycheck to paycheck? That’s 125 million US adults who bring in money only to send it back out. Racked-up bills and everyday living can strain your bank account to its last dollar, but it doesn’t mean it’s your only option. If you’re feeling stuck in this cycle, consider building a financial plan with small savings goals every week or month. Learn about flexible spending and figure out where you can cut monthly expenses like subscriptions or weekend outings.
Pay Off Your Loans
The average American debt totals $52,940. That includes everything from mortgage and auto loans to personal loans and credit card debt. These pesky monthly bills can be enough to discourage anyone from meeting their savings goals, but the fact of the matter is, you can’t let it hold you back. The first step is to steer clear of sneaky debt-builders like installment payment plans or store credit cards. Small charges can snowball into something much bigger, and soon you’ll find yourself still paying off Christmas gifts in the middle of summer. Luckily, we’ve got three methods to help you become, and stay, debt free.
Plan for Early Retirement
Whether or not you decide to retire early, planning for early retirement has its perks. This money mindset can help set you up for a strong financial future and allow you to relax more later in life. That means, if you plan to retire by 50 but choose to work through 65, you’ll at least have a well-cushioned nesting egg waiting for you when you’re ready. On the other hand, if your health takes a turn, early retirement might be the only option for you. Frontload your investment portfolio in the meantime, and in turn, feel comfortable about your retirement decision when the time comes.
Revisit and Reevaluate Your Goals
Life happens. But that doesn’t mean you should lose sight of your financial goals. If you’re going through a lifestyle change or a major life milestone, tweak your goals accordingly. Embrace the change and accept the challenge. Through consistency and determination, you will find that good financial health will never stray from your lifestyle, but instead, become a part of it.