How do you set your Financial Goals?
If you had to choose between sitting down at your kitchen table and setting goals or sitting in an airport awaiting your flight to Iceland, you would probably choose the airport, right? But how would you pay for the airfare? Hotel? Food? Souvenirs?
Goal setting may not be exciting and fun, but it helps you save for and achieve exciting and fun things, as well as things that may not be as thrilling (such as having enough money for retirement or a down payment on your first property). You could just wait and see what is left over at the end of the month after paying your bills, but since it is easy to get in the habit of spending what you make, you may end up having no savings by taking this approach.
Even if you are putting money in savings, how do you know if it is enough to get what you want when you want it by? By taking the time to think about what your goals are, how much they cost, when you want them by, and what your regular obligations are, you will know exactly how much to save each month. You can also make changes to your budget so that you can reach your goals and pay your bills with ease.
The first step in achieving your financial goals is, not surprisingly, determining what your goals are. For right now, just think about the goals themselves and when you want to achieve them by – don’t worry about the cost. Do you want to travel out the country in a year? Have a down payment for a house in four years? Be debt free in five years?
Once you figure out what your goals are, you can then calculate how much you will need altogether and what you should set aside each month. How you do this depends on whether it is a short-, mid-, or long-term goal. Check out our Budget Analyzer Calculator to help determine your monthly spending habits. Want to take things a step further? Play around with our becoming a millionaire calculator to see how much you’d need to save each year to have a million dollars by whatever time you plan for.