Have you ever thought of planning yearly financial goals to confront economic challenges likely to come in upcoming years? Do you find it hard to cut your expenses to meet these financial goals? Undoubtedly, setting a financial plan is not as dreamy as vacationing on a sandy beach or outside in a farmhouse. Still, it is highly supportive to save for specific responsibilities.
Financial goals refer to savings, investments, or monetary targets you have planned to meet over a said period. Financial goals can be short-term, intermediate-term, and long-term. These goals vary according to your age.
For example, as a college student, you may want to hit the short-term target of buying a pair of shoes or the challenging target of buying a bike or a car. While, a bread earner of a family will surely try to set a long-term financial goal of owning a house, saving for children’s education, or a comfortable retirement.
Whatever the financial goals are, they demand commitment, dedication, and perseverance because they give life and direction to your dreams. You can seek guidance from Ramsey +Goal Getter’s Guide to give life to your yearly financial goals.
Since most people work at least 6 to 8 hours five days a week, it is better to set yearly financial goals. No matter how difficult they are to achieve yet, they ensure your financial security after leaving your workplace.
A healthy financial goal is not about how much money you make. It is reciprocal to how you manage and plan weekly, monthly, or yearly to achieve your objective. Remember, there is not a magic trick or a shortcut to soar your bank account, but there are many ways to solve the problem of setting yearly financial goals. Here is a list of some ways you can follow to set your yearly financial goals.
DETERMINE YOUR GOALS
The preparatory stage of achieving your financial goals is determining what your goals are. Once you figure them out, you can easily calculate how much money you require, how much money you save and how much time you need o materialize them.
Short-term goals can be accomplished within a year, mid-term within one to five years, and long term necessitates more than five years. You meet any of these goals, make a worksheet to record your gross income and expenses.
If your payment is insufficient to save your desired amount, cut the costs on spendy and pricy items. Make minor changes, and you will be able to cover it within a couple of a month. Just stay motivated and get inspiration from your goals.
Determining financial goals is fundamental to achieve them.
Their importance is beautifully summed up by Inc Magazine in an article in these words,
“Goal setting alters the structure of your brain so that you perceive and behave in ways that will cause you to achieve those goals.”Inc Magazine
Always set a SMART goal as suggested by Quentara Costa, a certified financial planner in North Andover, Massachusetts. It means your goal should be SPECIFIC, MEASURABLE, ACHIEVABLE, REALISTIC, and TIME-BASED.
PLAN A HEALTHY BUDGET
To realize your financial dreams into real-life objectives, strategize a healthy and realistic budget. It helps to keep other goals on track by averting overspending and under-saving.
A budget is an organized spending plan that keeps a record of your income and expenditures. It helps you know how much cash you have in your hand and how much you will spend. It is a ladder that helps you reach your financial goals successfully.
A rigid consistency to it is incredibly valuable because it outlines the limits of your expenses. You start following it sparingly. Thus, you keep a check on your spending by reducing temptation.
You can create a successful budget by determining your income and estimating your expenses, then figuring out the difference between the two; you can either cut your spending or generate more money. In the case of savings, you can pay your high-interest debt or add up to your emergency fund.
Researches show that the 50|30|20 budgeting approach is highly fee sable. It means you have to fix 50% of your net income to needs, 30% to wants, and 20% to savings. Keep on reviewing your budget regularly to track you on the right path.
BUILD A WELL-SUPPLIED EMERGENCY FUND
An emergency fund is generally considered a short-term financial goal. However, it has long-term benefits. Therefore, keep it at the top of your priorities.
An Emergency Fund is money you keep aside to pay for unforeseen financial difficulties such as
- Unexpected medical expenditures
- Sudden car fixes
- Repairing or replacing household appliances
A well-supplied emergency fund safeguards you against external financial shocks. Therefore, supply to it as much your saving as possible. You can make money by doing part-time work, selling nonessential items, or cutting unnecessary spending. You can boost this fund by adding a bonus you get on special occasions or an extra monthly paycheck or tax refund.
Always start from small and try to save even if you have limited job prospects. Make a recommendable goal of saving for at least three to six months’ expenses or a minimum amount of 500$ to 1000$. After achieving your desired objective, you can replenish it by adding more money to it.
PAY OFF YOUR DEBT
Debt is always wrong, no matter how minor it is. Its vicious cycle ensnares you and hinders your effort of achieving yearly financial goals. Please get rid of it to save your future and make your present a boon. Paying off debt means you have more cash in your wallet to save, invest and spend. Above all, it frees your mind from stress.
Find ways to get money, audit your budget to bump savings, and explore strategies to hit your target by reading Nerd wallet’s How I Ditched Debt Series to know how to handle debt by following innovative strategies and workaday tricks. An emergency fund can prevent you from falling into this ditch.
First, focus to pay off the most expensive debts like credit card debt or payday loans. Then come to lower debt such as student loans or mortgage etc. Allen Wohlwend, a certified financial planner in St. Petersburg, said, “The interest charges (on credit card accounts) eat up so much of the cash flow that could be used for other objectives.”
Thus, by living on a budget, lowering bills, picking up a side hustle or two, and looking into debt consolidation, you can pay it off. Once you paid your loans, avoid borrowing more.
Nerd Wallet columnist Liz Weston says:
“One of the first steps in climbing out of debt is to give yourself away not to go further into debt.”Nerd Wallet
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PLANNING FOR RETIREMENT
We all have retirement dreams. To materialize these dreams, you have to plan carefully. Securing your retirement dream means to start saving enough now to ensure the goal of an easy life in retirement.
Various data reveal that most people need somewhere between 55% and 80% of their preretirement income to lead an easy life after leaving the workplace. It means saving 15% of your net income will suffice the desired level. It is not a hard target to beat. Start saving 15% now without delay because the earlier you start, the more time you will get to grow your capital.
Jeanne Thompson, Fidelity senior president, reveals:
“But when you are young is precisely the time to start saving for retirement.”Jeanne Thompson
Therefore, considering the inflation, hatch out a plan to save and invest in advance. If you have an excellent job with fringe benefits, you should economize your savings at least up to 15% to 20%.
The present world of economic challenges demands to set yearly financial goals. Yearly financial goals are personal financial objectives you strive to achieve within a fixed time frame. The question of HOW TO SET YEARLY FINANCIAL GOALS may confuse you if you have not planned to set yearly financial goals. At the same time, it inspires you and motivates you to prepare for a secured future.
Annually planned goals are convenient to follow. You can review your plans, track your budget, monitor your debt, and plan for your retirement according to your means. A yearly progress review helps you to find out lacking and work out to mount your savings. Above all, it leaves room to pay tribute to your efforts.