Steps to Help You Reach Your Financial Goals.
Are you looking to get ahead financially? Do you want to become a better saver and budgeter?
It can be difficult to know where to begin on the road to your financial goals.
No matter what your financial goals are, there are noteworthy steps you should take to help ensure your success.
Establish Your Goals.
Before you take any advancement towards your financial goals, you should first determine what they are. There are things you should carefully consider, like what you want to accomplish financially, such as how much savings you would like to have for retirement or having a certain level of debt-free net worth. Demystify the process of setting your financial goals by breaking them down into smaller, manageable steps.
When you’re in your early 20’s, it’s doubtful you will be thinking 50 years ahead. Unless you are really smart. Like genius-level smart. The sooner you start to think about your goals though, the better.
One way you could try to establish your goals is by looking at your role models. Maybe your Father, or friend that’s successful. You could try talking to them and ask them for any information they are willing to share with you. Ask them questions like, how difficult was it to reach your financial goals, what were some of the biggest challenges you had to face? Do you think if the economy was the same as it is now when you were in your 20s – 30s, it would have been more difficult for you to reach your financial goals?
Even though, someone would likely say yes absolutely, don’t let that discourage you from trying your best to put things into perspective. One thing you have to remember is that you did not grow up at that time. So although it may have been easier then, the struggles we face today are all we have to compare to. I only say this because putting things into perspective will make it easier to have realistic financial goals. It’s pointless to have unrealistic goals that aren’t achievable.
Make a Budget.
Creating a budget is like having a roadmap. It helps you figure out whereabouts you currently are, where you’d like to be, and how to get there. Take the time to list your income and expenditures so you can figure out how much money you have each month left to put toward your financial goals; this will make it easier to manage your money, and allow you more free time that you’re not worrying about whether you can afford this or that.
Making a budget is essential, don’t wing it and blow your savings.
Start Saving and Investing.
After you’ve made a budget, set aside money for your financial goals each month. If saving for retirement is one of your goals, consider investing some of your money in a low-cost index fund or opening a Roth IRA (which is only applicable to U.S. residents). Building your assets is the cornerstone of financial success. Another option is to open an ISA with your bank (which is only applicable to UK residents). ISAs are one way you can get a tax break. ISAs don’t offer very high-interest rates. Some of the highest I’ve seen recently is under 5%. So although you get a tax break, if you’re saving your money in an ISA on a 2-year fixed rate, there is the possibility that the interest won’t cover the cost of inflation.
Visit the following website page if you would like up-to-date figures on the current ISAs: https://www.moneysavingexpert.com/savings/best-cash-isa/
Investing is the smartest option in my humble opinion. You need to understand the market you will be investing in, so be sure to do your research; because there are times that are better to enter and exit than others. Before investing, it may be worth speaking to a financial expert that can give you some more expert knowledge on the market you want to invest in.
If you would like to learn how you can start investing for a retirement fund, I recommend reading my post: Maximizing Your Retirement Savings
Automate Your Finances.
Make it easy to save and invest for the future by automating deposits directly from your paycheck into your savings accounts. Setting up automatic payments to your retirement accounts is also a good option. That way, you won’t need to overthink about putting away money, so it’s one less stress off your mind. There are many ways you can automate your payments today. The most common is through direct debits and standing orders through your bank account.
Another good example of automating your finances is dollar cost averaging. You can automate a regular payment of a fixed amount into a asset you think will do well over time every week or month, (disregarding the price) whenever you get paid. That way you will be buying shares of that asset at various prices. Some months you may pay more for less, and some months you will pay less for more. You can do your research on this one. One good recommendation I received was to see how profitable a certain asset has been over 1 year. For example, if you would have put say $100 dollars into that asset every month for one year. Would you be up, or down? That’s just an example, there are numerous strategies you can take advantage of.
Spend Intentionally.
One of the most essential steps on your journey to financial security is to practice intentional spending. Determine how you want to spend your money and stick to it.
Instead of mindlessly spending, ask yourself: Does this purchase align with my financial goals?
Adjust as Needed.
As you build your financial plan, don’t forget to stay flexible. You may need to adjust the amount you’re saving or investing based on changes in your income or expenses. Or you may decide to tweak your financial goals as you go along. That’s all part of the journey.
By following these key steps to help you reach your financial goals, you can get closer to achieving them. Don’t get overwhelmed — think of it as a process that requires persistent effort but can be extremely rewarding as you take control of your finances.
