How to set financial goals

How to Set Financial Goals

Posted on 23rd November 2016

Setting financial goals is something that is really important if you are trying to save money and improve your financial situation. In this guide, you are going to learn all of the tips and ideas on how to set financial goals that you can achieve with practical tips.

1. Decide what your goals are

Knowing what your goals are is critical if you are planning on taking control of your finances. For example, if you want to get on the property ladder, you should look at the type of house that you can afford. Some people want a flat for an investment while others want a home that they can live in for the rest of their lives. Whatever your goals are, write them down in a notebook or create a vision board of the home that you want so that you can start seeing yourself in it.

2. Break down your goal into affordable chunks

Let’s say that you want to save £5,000 to start your dream of buying your own house. Saving this amount is not impossible but it can be difficult depending on how much you are trying to save right now. You can make it easier by breaking down your goal into affordable chunks. For example, you can start by saving £100 each time. You know that you need to do this 50 times in order to reach your goal. When you say the goals like this, it is easier to imagine getting to £5,000 saved because you are reaching the smaller goals in a faster way.

3. Create deadlines

The beauty of deadlines is that they hold you accountable for reaching your goals. You can have weekly deadlines for certain savings goals or you can also have monthly deadlines as well. You should have dedicated deadlines if you are planning a big financial goal such as getting married or buying a house. Missing deadlines will make it harder for you to reach your targets and it can affect your motivation as well.

4. Know what you can achieve when you reach your financial goal

One of the things that makes it difficult to achieve financial goals is many people cannot visualise how their goal will help them. Many of us want to own our own homes but imagining yourself with your own home is a different thing. If you like gardening, imagine gardening in your own house as opposed to being a tenant where your landlord can tell you what types of restrictions exist with your garden. You need to be more visual with goal, so that you can see it coming to life.

5. Create a budget for your financial goals

Many of us love travelling, but going on holiday costs money. Whether you are going on a weekend break or if you are planning a luxury exotic holiday, you should create a budget to reach your financial goals. This means make cutbacks now so that you can enjoy your holiday later. Delaying gratification is one of the best tricks that you can learn when setting financial goals so that you can treat yourself.

6. Don’t deprive yourself

If you are working to improve your personal finances and achieve financial goals, it can be tempting to go cold turkey and just focus on your goals all of the time. While it is important, you should not do this to the point of depriving yourself of things that are important to you. Many people have hobbies that they are passionate about. For example, if you set yourself the target of saving for your wedding but you are passionate about art, you should not deprive yourself. You can go to art galleries without having to buy any art. This way you still get to indulge in your passion for art, without jeopardising your financial goals.

7. Share your goals with your partner

If you are married or you are in a long-term relationship, you should consider sharing your financial goals with your partner. Married couples need to have aligned personal finances, and this is especially true of financial goals. Whether you want to buy a new house, or if you want to go on holiday, you should be completely transparent with your partner on how you are spending and saving your money. By being transparent, you make it easier for yourself to build a life together because you are both honest about what you want for each other.

8. Consider the impact of children on your finances

If you are trying to start a family, children will have one of the most monumental effects on your personal and financial goals. You need to consider how to work in your children into your goals. For example, consider how much you need to save for your child’s university education and you should also think about expenses such as birthdays for your children and new clothes that they will constantly need. The earlier you can set and achieve your financial goals for your children, the better it will be for you and your family.

9. Monitor your progress

As the saying goes, a goal without a deadline is a dream. Money lives in the world of goals, not dreams. If you truly want to achieve your financial goals, you need to monitor your progress constantly in order to achieve success. You can do this with a spreadsheet showing how much money you are spending and you can also do this with a notebook, budget planner apps, etc. Ideally, you should be inputting everything into a spreadsheet specifically about the money that you have saved. Review your progress constantly to ensure that you are hitting your targets. You might find that you started with vigour but the realities of life made you stop focusing on your goal.

10. Have a laser-like focus for achieving your goals

We all know what it means to be laser-focused but it is different when you have to apply it into action. Every morning before you go to work, look over your financial goals. If your goal for the next three months is to save £500, every morning remind yourself of this goal so that you do not stray off course. The laser-like focus will help you achieve your goals because you will be putting all of your energy into these goals. If you want to teach yourself on how to be more focused on your financial goals, cut out distractions when it comes to managing your finances. The less distractions you have, the easier it will be to focus on your goals.

Whether you have short-term financial goals or long-term goals, it is critical for you to know what your goals are and focus on achieving them for yourself. It is easy to be drowned in the noise of what you think you need to spend your money on. Once you have chosen your goals, do not stop until you achieve them. When you achieve your financial goals, you will feel in total control of your life.

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