It’s not as difficult as it seems.
If you want to get ahead in life then setting personal finance goals is a must. From saving for big purchases, to reducing debt and learning to live within your means, personal finance goals come in many different shapes and sizes. Whatever the objectives you have, the same process of focus and commitment will help you to achieve them.
Tip 1: Set goals you can actually achieve
Goal setting needs to be realistic if you’re actually going to get there. If your goal is to be a millionaire then – unless you’ve had a genius business idea or some very lucky numbers – your head is in the clouds. When you start making personal finance goals choose realistically. For example, if you’re currently in debt set a goal to pay 10% of it off by the end of the year, as opposed to the whole amount. That way, you’ll have one goal achieved by the end of the year and you’re more likely to feel motivated to go on to do more.
Tip 2: Track your progress
Particularly for goals over a longer term it’s crucial to keep an eye on how you’re doing. Are you still on track to meet the goal you’ve set or do you need to make some adjustments if you’re going to get there? The best way to measure your progress accurately is to break down larger goals into smaller objectives. As you move from one to the next you’ll feel a sense of progress and you’ll be able to keep track of where you are.
Tip 3: Prioritise your goals
Most of us only have limited resources so, when it comes to personal finance goals, we need to take them one at a time. Some goals can be prioritised by looking at the overall impact on your finances. For example, it’s unlikely you will earn more interest on savings than you will pay on debt, so prioritising paying off debt is a better move than saving. Your most expensive debt needs to be your highest priority, whether secured loans, guarantor loans or credit cards. Other goals may need to be prioritised because of timing, such as buying a property if you want to start a family, or saving so that you can quit your job and travel.
Tip 4: Work out the details
When you’re setting your goals go through the financial details carefully to make sure that the goal you’re setting will achieve the result that you want. For example, how much will you need to save each month if you want to buy that car or set up that business? Don’t use vague statistics and guesswork, be specific and detailed when you’re planning your finance objectives.
Tip 5: Expect to run into problems
When you’re planning finance goals it’s best to hope for the best but expect the worst. So, for example, you might find that repairs to your home eat into all your holiday savings or a redundancy means you have less for retirement. Although this might sound gloomy the key is to be realistic and to be ready. What’s your contingency if it doesn’t all go to plan and how will you get back on track?