The start of the New Year is a great time to re-evaluate your finances and set some financial goals. There are so many benefits to setting financial goals. Creating personal short or long-term goals helps solidify your financial plan and allows you to evaluate your situation, helping you determine how you’ll spend and save your money. This will support better financial freedom and security.
We talked about setting financial goals briefly in our October blog here when we explained the benefits of seeing a financial adviser.
Now we want to give you six simple steps to help get you kicking those goals sooner.
- Write your goals down. Having a visual helps you see where you are at and makes your goals tangible. You can share these with a partner or friend, stick them on your fridge or put them on your desk, this way you are seeing your goals every day, keeping you focused on them. Schedule in a review with your partner or friend for accountability and to help you celebrate your wins.
- Make your goals specific. You’re not just saying, “I want to be better with money.” Having vague goals makes them harder to achieve as you’re never really sure if you’ve gotten there or not. An example of a specific goal might be “I’m going to get rid of my $10,000 credit card debt.”
- Make your goals measurable. By making goals measurable and breaking them down into smaller portions you get a sense of achievement by accomplishing these smaller manageable parts. If your goal was to pay off your $10,000 credit card, you will be paying $192 per week. You can cross this off weekly to keep your momentum.
- Make your goal reachable and realistic. Try not to compare yourself with other people, just because someone else you know is saving $500 per week, it doesn’t mean that goal will necessarily work for you. You may not have the financial capacity for that type of goal at this stage. Instead start with something that will stretch you, but won’t ruin you financially. Sometimes sitting down and working out your budget can help you set this amount. You will see where your money is going and how much you have left over, out of this left over amount, you can choose what to save and how often.
- Give yourself “check in” dates and a finish date. Your deadline can be shared with your partner or friend and you can schedule regular “check ins” with them for a review and some encouragement. A deadline or finish date keeps you on target and can be more motivating. If you have no finish line, it’s easy to procrastinate and put off your goal for the next month.
- Get some help. Don’t be afraid to ask for help. Sometimes it can be daunting even thinking about setting financial goals. If you are unsure on where to start, or what kind of goal will work best for your financial situation, we suggest you sit down with a financial adviser and get some professional advice. This step is especially important for mid-long term goals that involve investments or superannuation, the advice from a professional can be invaluable.
While you may already have some financial goals in your head, it’s always best to start with short term goals. This ensures you don’t overwhelm yourself and try to achieve too many goals at once. We have a SMART goals worksheet you can download and print to help with this. It starts off with short term goals and examples (such as saving $100 per month) and moves through to mid-long term goals. These mid- long term goals can include bigger ticketed items, house deposits, investments and retirement planning.
Financial goal setting is a great way to feel in control of your finances and plan for your future. We believe setting financial goals is best started earlier rather than later so you can achieve all that you would like to and be prepared for the unexpected. The earlier you start, the more time you have to grow your finances and potential financial freedom.