Setting Financial Goals: What, Why, How?

Setting financial goals helps us to focus on our money and where we want it to go. Savings, investments, spending: these factors all need to be considered when setting goals. Goals can be short or long term, small or large, but they all need to be achievable. You may want to start small by saving for a vacation, and once in the rhythm, save for bigger investments like a house or retirement. The hardest part of setting a financial goal is not knowing where to start. Here are a few tips to help you on the right track.

How to Set Money Goals

It’s important to be realistic when setting your money goals. Be sure that your goals are achievable will help you to stay motivated to reach these goals. If you never reach a goal, or it seems impossible it will be easier to give up. Write your goals down. Keep them simple and give yourself a timeframe. Saving for something small to begin with and then upping the ante for something even bigger.

Saving and Paying off Debt

Most of us have high-interest rate credit cards that seem impossible to pay off. Your main goal should be to pay off that debt first and as soon as possible. You might consider paying off the debt with a lower interest loan.

Saving two to three months’ income for an emergency should also be a priority. It is a good idea to plan for the unexpected and having this money could take some stress off a possibly stressful situation.

If you have a mortgage, see if you can make increased payments. This will help you to save on interest and pay your loan off faster.

It’s never too early to start saving for retirement. Start small and increase your payment to your retirement fund as your salary increases. Even a little amount a month will add up over time.

Steps to Take to Reach Our Goals

If you have a goal to save for a down payment on a house, one step may be to open a savings account by your next payday and save $50 a week directly into this new account. If you have direct deposit it’s very easy to set up an allotment that would go directly into that account. You don’t even have to give it a second thought.

You can pay off your mortgage faster and pay less interest if you set up half-monthly payments of at least half the amount you pay monthly. That means making payments twice a month on your mortgage.

Be sure to review your goals in six months or a year. Once you’ve reached your goals, it’s time to celebrate! Then set new goals, keeping the same tips in mind. Contact Carolina Money Minders for more help with setting and reaching your financial goals.