While sticking to New Year’s resolutions is important, what’s even more important is sticking to your financial goals in 2020. Here is a quick guide on how to think about and set financial goals so that you can stick with them.
Creating Larger Financial Goals is Easy.
When financial planning, the big goals are usually pretty easy to set: be debt-free, have a comfortable emergency fund, or own your own house. The struggle is finding out how to get from where you are now to the place you want to be. It can be overwhelming to think about achieving such large goals, but it’s necessary to know where you are trying to go in the long run.
Start By Getting A Positive Income
It’s one of the most difficult tasks, but always the most necessary. The best way to start and ensure you can set realistic financial goals is to get to the point where your income is more than your monthly expenses enough to start making a change. Usually, that means cutting back unnecessary expenses, such as going out to eat, a streaming service, drinking at nights out, or buying the latest technology. While there’s no general rule about what should be cut down, there is typically some things that can be changed. Create a real number that you need to have extra at the end of the month based on what you’ve cut, and use that as your baseline for goal setting.
Decide What Is Most Important and Start There
Now that you have some extra money at the end of each month, you need to decide which of your goals are more important than others. Do you have high-interest debts that need to be paid off? That might be the best use for the extra money. But if you don’t have any extra money to pay for an emergency, you might go into debt again to pay for it. There’s not an easy answer to deciding what is most important for your financial situation, but what is more important is that you are creating a positive change in your finances. Set your goals based on three-month increments, and don’t be afraid to revise them if a financial emergency arises.
Once You Start Making Headway, Don’t Give Up!
Once enough debts are paid off, it is tempting to use that extra financial room to splurge. There’s always something that you can imagine will make you feel good even if you’re going back into your financial hole to buy it. The problem is that it will always leave you in a bad spot, and it is always better to tough it out until you can genuinely afford it, rather than being able to go into debt for it. In the long run, you can have way more for the same amount of money if you can stop paying for interest and debts.