With things in upheaval around the world, now more than ever you should be preparing and looking ahead to the future. Your goals may be changing, but your drive should remain the same. Check out some of the best way to reach your financial goals!
Define your financial goals
Where do you want to be with your finances? Are you working towards becoming debt-free? Do you want to go on a paid for vacation? Do you want to build your savings?
When setting a goal, make sure it is realistic and specific. Instead of saying I want to pay off debt, be specific and say “I want to pay off my car loan ($8,000) by the end of the year. This will help you break it down to see how much a month you will have to pay on your car to pay it off. For example, you will have to put about $690 on your car each month (depending on your interest rate) to have it completely paid off by the end of the year.
Its best to focus on one goal at a time to prevent stretching your finances too thin and burning out.
Create a budget
This is the plan for how you will reach your goals. Make a list of all of your expenses and compare it to your income. After all of your bills and expenses are paid, how much income do you have left to put towards your goal? If you are over-budget and are spending more than you make, look for ways to lower your expenses. Is there any part of your budget that you can lower or cut out of your budget completely? Is there anyway you can increase your income?
If you are looking for a more detailed guide to creating a budget click here.
Make adjustments to your budget
Is there any area that you could cut back on to reach your goals quicker? A couple of areas we cut back on is cable tv and lowering our grocery budget by meal planning. Another adjustment you could make is to add an extra source of income to your budget. When we started our debt-free journey my husband started a small side business that he did one day a week, which brought in a few hundred extra dollars a month. Another possible way to increase income would be to work overtime if your employer offers it.
Have an emergency fund
Emergencies happen. Cars break down, appliances break, unexpected medical expenses come up etc. It is best to be prepared for these unexpected expenses by having an emergency fund already set up. This prevents an emergency from completely derailing your goals. For us, having an emergency fund lessens the stress by knowing we aren’t going more into debt to cover these expenses.
Whenever we use any money from our emergency fund, we make sure we put it bring it back up to $1000 before paying extra on any debt or making any large, unnecessary purchases.
Create a visual to track your progress to your goal
If you are a visual person and enjoy seeing your progress in that way, create a visual to help keep you motivated to reaching your goal. When we were working towards paying off our car, I had a drawing of a thermometer with lines on it that we kept on the fridge. Each line represented $500 and each time we paid $500 on our loan we would color a section of the thermometer. Having that visual helped us stay focused on our goal. There are so many creative ways people track their goal. You can search “vacation savings tracker” or “debt payoff tracker” on Pinterest to find fun ways to track your progress.
What ways are you reaching your financial goals this year?