Turning Your Financial Goals Into a Plan That You Can Stick To
When thinking ahead and planning for your future, certain goals may come to mind. Maybe you want to retire by the age of 60 with substantial savings, or perhaps you want to be debt free within the next five years. These financial goals can be attained—but not without intention and planning.
Craft Attainable Goals
When thinking about your personal path to financial wellness, it’s important to have specific and measurable financial goals in mind. While we all like to dream big (and it’s okay to do so), it’s also important to be realistic and make sure your goals are attainable.
Let’s say your goal is to have a healthy emergency fund. Most financial experts recommend establishing an emergency fund that covers three to six months’ worth of expenses. This goal can be achieved, but not without some hard work. After all, you likely won’t obtain that money overnight, so how will you get there?
Create a Workable Plan
It’s important to recognize that to reach your long-term goals, you will first need to develop a plan for how you will accomplish those goals. When brainstorming your plan, it can be helpful to have everything written down in one place, whether that be in a journal, in an online document, or on your phone. Just be sure to find a method that works for you and is easily accessible.
Here are a few key things you’ll want to note:
- How much you need to reach your goal
- How you plan to attain your goal
- Ways you can increase your income to help you reach your goal
- Ways to decrease and prioritize expenses to help you reach your goal
- Personal money strengths and weaknesses that could propel/hinder your progress
Break Large Goals into Smaller Components
Using the emergency fund example, you know that you’ll need to have three to six months’ worth of expenses saved to reach your goal. As we mentioned earlier, you likely won’t reach this amount overnight, so you’ll need to think of short-term actions that can help you get there.
For example, you can look for ways to increase your income. If you have specific services that you can offer such as copywriting or graphic design, then freelancing could be a great source of revenue. Taking up a part-time job, driving for a food delivery service, selling goods online, and investing are also great ways to increase your income. You may decide that you want to put all proceeds from your side hustle towards your emergency fund or maybe only a portion. This is up to you! Remember that your goal and path to get there should be flexible.
Additionally, you should be looking for ways you can decrease and prioritize your expenses. When looking at your expenses, you may notice that you’re living beyond your means and eating out at restaurants three times a week. You might decide that you’ll only go out once during the week and put the money that you would have spent on the other two meals towards your emergency fund instead.
No matter what you plan to cut, make sure that your actions are realistic. If you truly aren’t able to give up your daily coffees during the week, find alternative ways to realistically cut and prioritize your spending to reach your goal.
Track Your Progress
As you put money towards your goal, documenting your progress can help you stay on track. You may decide to use a journal, calendar, spreadsheet, or even an app to track your progress. Again, it’s important to find a method that works best for you and will help you stay accountable. Having deadlines for milestones can also help, as the results will be quantifiable. For example, a timeline could look like:
- Have one month’s worth of expenses saved by April 15
- Have two months’ worth of expenses saved by August 15
- Have three months’ worth of expenses saved by December 15
- Have four months’ worth of expenses saved by April 15
- Have five months’ worth of expenses saved by August 15
- Have six months’ worth of expenses saved by December 15
After the first milestone is reached, you might treat yourself to something small as a way to celebrate. This can help you stay motivated as you work towards your goal.
Continue to Assess and Adjust Your Goals
Finally, you should evaluate your personal money strengths and weaknesses to see how they could propel or hinder your path to reaching your goal. If saving is hard for you, you might consider automating your savings. There are many apps available that offer this service. Additionally, you might be able to ask your employer to deposit a set amount from each paycheck to the savings account that houses your emergency fund.
Please Note: Any references to dollars, dollar amounts, or the dollar sign in this article are used simply as a means of example, so please substitute your local currency and rates.
By contrast, if saving is easy for you, you can challenge yourself to slowly increase the amount you have automatically deposited. For example, you may designate $100 to be deposited the first month, $125 the second month, $150 the third month, and so forth.
Once you have your goal and plan of action established, the path should be straightforward. Just follow through! Don’t forget to have some fun along the way and adjust as needed.