So, you want to put a little time and attention into your financial life? The future of retirement is uncertain. The cost of living is rising. It’s time to take matters into your own hands.
Financial goals are what every person should have. This is because they are the backbone of our financial success. They give us a sense of direction and purpose. And they also help us to stay motivated in the long run.
Setting future financial goals is not just about saving for retirement. You need to be mindful of your short-term goals, too. Setting short-term targets can be the first step in achieving your long-term goal.
What is an example of a long term financial goal? An example of a long term financial goal is retirement. Another example of a long term financial goal is buying and owning a house outright.
Let’s look at what you should consider when setting your financial targets.
Don’t set a goal and leave it. You need to act.
We often set financial goals for ourselves and find that we are not able to achieve them. Setting financial goals is easy; it’s achieving them that is difficult. You have to do more than just thinking about a goal or working out a plan. You have to take action. This can be the key between success and failure.
Know you why. Why do you want to achieve that financial milestone?
There are different types of financial goals that people can set for themselves. But it is important to know which type of goal is best suited for you so that you will have a better chance at achieving it in the future.
Maybe you want to get out of debt quickly and get your finances back on track? Maybe you want to have financial security for your family and to transfer money to them? Or maybe you want to be able to retire early or travel more or make investments? Whatever it is, you need to be clear on this first.
Create a budget that is suited to your lifestyle
When writing a budget, you shouldn’t take a template that you found online and try to mold your situation to it. Every person’s financial situation is different. You need to create and write a budget for YOU.
There are many ways to create a budget that suits your planning style. You can use an online budgeting tool, spreadsheet software, or even pen and paper. The important thing is to have a plan so you can start saving money!
You may even surprise yourself in areas where you waste money!
Futureproof your finances by making the hard choices now
A plan is only as good as its implementation. The best-laid plans can be derailed by several factors, including unforeseen changes in the economy. To avoid this from happening or impacting you, you need to cut back and spend less money today. It will all add up and will certainly futureproof your finances.
Make your money work harder
The inflation rate is increasing and savings interest rates are much lower than ever. Therefore, you should think about what you do with your money saved to ensure you don’t lose out to rising costs.
To use illustrate this with an example: A pint of milk may be £1 today but might be £1.50 in 5 years, however, your £1 in the bank will still only be worth £1 in five years. This effectively means you have “lost” 50% of your money due to inflation.
You should therefore consider investing a portion of these funds as this can produce a greater return on investment. And if you want to play it safe, you should consider index funds. With this approach, you can either match or outpace the increasing inflation rates each year.
James Banerjee is an Account Director who graduated from the University of Kent in 2014. He works in SEO on clients such as HSBC UK and Nestle and he has a keen interest in personal finances and money-saving advice.