How to Set Financial Goals for Your Future
According to a new Pew Research Center survey, nearly half of non-retired adults say the coronavirus pandemic’s economic crisis will make it harder for them to accomplish their long-term financial goals. The same study revealed that 51 percent reported their financial situation deteriorated during the public health crisis, and 44 percent believe it could take them at least three years to recover financially.
It has been a trying time for millions of Americans, even as the U.S. economy begins to recover. More households are concerned about meeting basic needs, paying off their debt, and saving for retirement.
Will conditions improve? They probably will, considering that the world’s largest economy is resilient, robust, mobile, and innovative. But it is also all about setting and meeting financial goals to effectively pull yourself out of this rut.
We all say that we want to retire at 65, but we don’t always establish a plan to get there. So, what do you do? It begins by outlining financial goals and milestones today for tomorrow.
Here are six steps to help you set realistic, actionable financial goals for your future:
1. What Do You Want to Achieve with Your Money?
Everyone has different aims with their money.
For some, it is about saving enough money for a child’s college tuition. For others, it is about putting aside cash for a Tesla. For most, it is about having a large chunk of capital for retirement.
Whatever the case may be, it is crucial to sit down and think about what you want to accomplish with your money in the short-, medium-, and long-term. This will impact the savings and investment choices that you make.
2. Organize Your Finances
Do you know how much money goes into your account every pay period? What about government benefits? Investment returns? On the flip side, do you know how many funds leave your account on a regular basis?
Ultimately, it is crucial to organize your finances as you begin your journey to meeting financial goals for your future. Unsure where to start? Here are a few tips to consider:
- Grab all your paystubs, bills, credit card statements, and invoices.
- Comb through your accounts to determine how much you have and spend.
- Find out how much you earn through interest, dividends, and returns.
- Calculate the dollar figure on basic necessities, fixed- and variable costs, and leisure.
- Consider another account, like an all-in-one checking and investment account, to help you meet your financial goals by getting your money to work harder for you.
3. Keep Tabs on Where Your Money Goes
This ties into a previous point, but it is worth noting again: monitor where your money goes.
Because of direct deposit, we generally refrain from keeping tabs on your earnings. But this can lead to accidental overspending, and makes it harder to catch instances when too many funds have been mistakenly deducted from your checking account.
You may also learn that you waste a large chunk of your hard-earned bucks – from that daily $5 morning latte to the overpriced Cadillac cable package you hardly ever use. As the adage goes, watch your pennies, and the dollars will follow.
4. Be a Smarter Shopper
Are you a good shopper? Do you find deals, cut coupons, and price-match? Or do you buy the stuff you need, when you need it, without any additional research?
Either way, if you wish to achieve your financial goals with your present means, it might be a good idea to advance your shopping skills by practicing some smarter, savvier shopping habits. Start by cutting back spending on the non-necessities, price matching, or swapping out pricey spending habits for a more affordable alternative (i.e., hosting a dinner at your home instead of dining out). Small changes over time can make a big change to your bank account.
You do not need to go dumpster diving to be a better shopper. You just have to think critically about each purchase.
5. Short on Cash? Find Ways to Make Money
It’s no surprise that the labor market experienced a steep downturn throughout the COVID-19 public health crisis. It is only now beginning to recover the millions of lost positions from before the respiratory illness effectively brought the US economy to an abrupt pause.
This has made it challenging for households to meet their goals or even keep up with their living standards. The solution may be to find other, creative ways of making money.
Unsure what to do? Here are a few recommendations:
- Freelance your skills, such as writing, coding, and graphic design, on the internet.
- Sell stuff you have not used in months or that does not spark joy anymore.
- Sign up for ride-sharing, rent out your car, deliver food, or rent a spare room.
These are only some of the ways of supplementing your income and adding a few more dollars to your net worth.
6. Measure Your Progress and Establish a Deadline
You do not want to get behind on your financial goals. If you do, you might postpone your objectives, and even abandon the cause entirely. What you can do is measure your progress through milestones or benchmarks and establish deadlines to keep you accountable to your targets.
Don’t know how? Let’s say you want to save $15,000 so you can contribute to your son or daughter’s down payment for a house next year. The trick is to break your goals into small chunks. In this case, you would need to save nearly $300 a week. You have one year to do it, so you should aim to have $7,500 saved within six months. This tactic gives you a way to measure your progress, enjoy the satisfaction of ticking off each milestone, and celebrate an end date.