Have you ever felt like you're living paycheck to paycheck, and you just don't seem to be making any progress financially? In an uncertain economy, it's always good to have financial goals that will leave you feeling secure. It's important to set financial goals so that you are prepared for major events in your life, like a new house, job loss or the birth of a child. Follow these tips to learn to set financial goals.
Decide to work towards something. You may feel like a mouse on a wheel, spinning your wheels every month but getting nowhere with your finances. Make the commitment to yourself to work toward some financial goals. It will involve making small and large changes in your spending habits, but the payoff in the long run is well worth it. Set a financial goal as a reward to yourself. It might be saving up cash for a trip, paying off credit cards, or starting a nest egg. It doesn't matter whether the financial goal is big or small. Just decide that it's time to stop frittering away your money and instead, put it to good use.
Get real about your money. Before you can set financial goals, you need to have an understanding what how much money is coming in every month, along with how much you're spending every month. If you live with your partner, take his or her financial information into account with this as well. Write down all of your fixed expenses (mortgage/rent, car payments, loans, utilities, etc.) and figure out how much combined net income you make each month. Once you figure this out, you should have a good idea of how much money is left over (if any) for your variable expenses. Variable expenses are expenses that you choose to spend on each month, like groceries, nights out and gas. Many people would be surprised to learn just how much money they spend on variable expenses every month. Your bank statements from the past six months should give you a good idea of both your fixed and variable expenses, summarizing where you money goes each month. This should be an eye-opener for you, letting you know that perhaps it's time have a plan for your money and set some financial goals.
Talk to a financial advisor. Although you may think you know what's best when it comes to your money, it pays to talk to a professional. He can help you to set financial goals that are realistic, based on your income, debt, savings and long-term goals. Often, the first meeting will be a free consultation. Take advantage of this and see if you get a good feeling from the financial advisor. If not, steer clear and look for someone who has your best interests in mind.
Set a budget. If you are unable or unwilling to talk to a financial advisor to help you set your financial goals, you can do it on your own. You'll need to know how much money you have to work with every month (variable expenses), and work to set a reasonable budget from this. Get into the habit of using cash so that you can keep track of your spending. Keep credit cards only for emergencies, or pay them off entirely each month to help you stay on budget. A good rule of thumb is if you haven't got the money, don't spend the money. Allot a certain amount of money each month to groceries, gas, gifts, entertainment and miscellaneous. If necessary, re-align your budget with your financial goals so that you are able to set some money aside to meet your financial goals.
Go automatic. In order to reach your financial goals, you'll need to work toward them week by week. Save yourself some time and set this up automatically with your bank. Commit to having $50, $100 or even $500 withdrawn every pay cycle automatically and put into a separate account designated for your financial goals. You can usually do this yourself online, or your bank can assist you. After a while, you won't even notice the money being taken out each time, but you'll be quite excited to see your money accumulating towards your financial goals. Small steps and a committed attitude will help you to reach financial goals that you have set. Just make sure that once you've reached your financial goals, you continue to set new ones.