Welcome to Crush The Debt financial coaching! In this space, I will share tips that are practical that use to succeed in your financial journey. In today’s topic, I will explore the need to have a financial plan in order to take full control of your finances. Every hard-earned dollar that comes to you need to have an assignment. If you do not have a plan, then you will always wonder where your money went.
Setting Financial Goals
Let’s start by asking this question” What are your dreams for your future?” Do you want to buy a home, pay off student loan debt, credit card debt, or any other debt, you need to start by clearly stating your goals.
Listen to this, If you don’t put a plan behind your finances, it will be incredibly difficult to do well with money.
When it comes to changing your money habits and transforming your financial future, you must set goals that can be achieved.
A financial goal is any plan you have for your money. It’s the big-picture objectives you set for how you’ll save and spend your money.
What are financial goals anyway?
Goals can be divided into short, medium, or long-term goals. A short-term goal might be to pay off a small credit card or buy a new dishwasher. A medium-term goal might be to take a family vacation or save enough money for a down-payment on a new car. Long-term goals usually include plans for retirement or paying for your child’s education.
Examples of Financial Goals:
- Paying off debt
- Set a budget every month
- Saving for a house
- Saving for a vacation
- Saving for retirement
- Saving an emergency fund
- Live below your means
Why is setting Financial goals important?
Having a goal will change how you look at your money. Here is the thing; having a clear goal will start to affect the daily decisions that you make with your money. For example, if you have been eating out a lot, you may need to cut back, eat at home, and redirect those funds towards your goals.
Tips in Making a Financial Goal
- Figure out what matters to you.Whatever goals you set, they are yours, and you will have the power to choose what is important to you.
- If you have a spouse or significant other, make sure that person is part of the goal-setting process. Children, too, should have some say in goals that affect them.
- Categorize each financial goal as
- Short-term financial goals- Within a year
- Mid-term financial goals: Within 5 years
- Long-term financial goals: more than 10 years
- Apply a SMART- goal strategy. Just remember the acronym: SMART [Specific, Measurable, Achievable, Relevant, and Timely]
- Write them down.Make the commitment to yourself by putting them in writing.
- Make them specific. For example I’m going to pay off $12,000 of my credit card debt this year.” That means you will pay $1000 per month to achieve that goal.
- Your goals must be measurable. As per the example above. You can drill down to even how much you need per week. $ 1000/4= $250
- Your goals must have a deadline- Time sensitive. For our example above — we have 12 months to achieve this goal