Do you know what you want your future to look like? Do you want to buy a big home with a yard? Do you want to pay off your student loans? Are you ready to get out of credit card debt? To accomplish any of these, you will need to set financial goals. Goals need to be set clearly and concisely to reach them.
Setting goals can be very helpful, but transforming them into reality is another process. Here are some ways to help you get started.
- Let Your Money Work for You
For most people, the days at work are filled with tasks they need to complete to reach their goals. The same goes for financial goals, and your money should be helping you reach them. Financial goals can be easily revised throughout your life. Just remember that they shouldn’t be set in stone because they may change over time.
- Set Financial Goals
When setting achievable goals, consider setting short-term, mid-term, and long-term goals. Short-term goals might have a timeline of 6 months to 5 years. Mid-term goals might be around 10 years and long-term financial goals are typically beyond 10 years.
- Set Financial Goal Target Dates
Being specific with your target dates for goals can help. For instance, if you have a toddler who will be attending college in 2035, then set a target date for your savings goal to the same year. If you want a trip for your birthday, set goals leading up to that date that will get you to the financial target you want to reach.
- Prioritize Your Goals
Each of your goals can also be categorized as either a critical, a need, or a want. Knowing which goals are more important will help you plan better. If funds get a little tight for a couple of months, you will be prepared to know where your extra funds should go.
- Know What You Have and How Much You Still Need
Do you have money in a Roth IRA, a 401(k), or a 403(b) account? Log those numbers on a worksheet to set a retirement-related goal. For instance, if you plan on buying a home in two years, you might, for example, divide the amount you need to save by 24 months.
Setting goals is an important step in helping you to achieve financial freedom. Never lose sight of your goals and the plans you have for reaching them.
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