We understand that it is difficult to prioritize your financial goals. While goals and priorities differ from one person to another, one can follow certain ground rules when it comes to the attainment of financial goals. Financial decisions can be overwhelming: should you avail a cash advance loan for your trip to Bali? Should you start saving for an emergency fund or direct your savings towards retirement? Should you pay off your bad credit loans or start investing? Here’s what you can do to gain some clarity.
Figure out your short-term and long-term goals
An individual cannot accomplish much without deciding upon short-term and long-term financial goals. Figure out the same by asking yourself this question: what stage are you at in life and where do you wish to be in [x] number of years? Your financial goals can comprise buying a new apartment, saving up for a PhD course, or starting an emergency fund. When you start wishing for these goals, it is time to formulate short-term and long-term financial plans. No matter what your vision is, make sure to create SMART goals:
For instance, plan a budget for your pan-India trip in order to gauge how much money you would require for accommodation, travel, food, and miscellaneous expenses. Remember to tie a concrete monetary estimate to your goals, along with a feasible timeline for accomplishing each goal. While it is okay to be ambitious, try not to set yourself up for failure by giving yourself far too little time. Jot down achievable goals so that you can revisit them as and when required and remain consistent.
Prioritize your list
Now that you have figured out your goals, it is time to prioritize your list in an ergonomic manner. Determine how much money you need to save up for each goal and list them in descending order of importance. Some situations will demand more attention than others, for instance, paying off a massive debt is more important than saving up for retirement. Remember to try and save for an emergency fund by saving up a little each month. As making more money can help you attain your goals faster, make time for a side-hustle or ask for a raise at your workplace. While doing the latter, keep timing and contribution in mind, while gauging your personal worth.
Formulate and maintain a budget
Once you have the means to attain your financial goals, you need to establish a budget and learn to stick to the same. The best place to start is to outline your monthly expenses, including rent or mortgage payments, medical expenses, bills, food and peripheral costs, etc. Incorporate a category for savings and treat it as an expense – this way, you will be able to set aside a certain amount, which will prove to be indispensable later on. You should also look beyond your monthly expenses and think about bills that might have to be paid on a quarterly or yearly basis – property taxes, auto insurance, and car repairs. Use budget tracking apps to monitor non-recurring expenses or use the 50/30/20 rule instead.
To conclude, take one big project at a time and try not to be so hard on yourself. Focus on small triumphs, as they lead to mammoth contributions in the long run. Keep adding new objectives and revise your goals as per dynamic needs and circumstances. You could also try investing, as it can direct you towards a more financially sustainable path. You will be able to live to the fullest in no time!