No matter which stage in life you are in, it is important that you come up with your financial goals. After all, you can never tell what might happen in the future, so it is best to have a safety net that can save you from financial hiccups in life. By setting your short-term and long-term goals for your finances, you can work your way towards attaining financial freedom. After all, not having any plan for your finances will only cause you to overspend and go beyond your budget. Thus, you may end up being short on money just when you have unexpected bills to pay. Plus, the longer you will have to wait to retire if you are unable to set up a safety and secure nest for your future.
Moreover, if you are stuck with credit card debts, and you end up getting into this cycle for years, you may feel as though there is not enough money available all the time. This gives you a feeling of vulnerability, which can impact your ability to manage significant risks in your life. This is why it is very important that you conduct annual planning on your finances, so you can review all your goals and keep them updated. You should also review the progress you have made the last year. In case you have never set up financial goals before, then now is the time for you to get started.
The following are just examples of short-term goals for your finances, which can guide you in creating your own plan.
1. Create A Budget
You need to come up with a realistic budget each month, which should include your food expenses, rent, utilities, transportation, and other items that apply to your life. Once you are clear about your budget, you will be able to begin working towards checking your daily expenditures, which should not go beyond the allotted amount of money you have set for the month. If you have discovered that eating out too often or buying clothes twice a week have been causing you to spend more than you should, then it is time for you to limit these. You may consider cooking at home and bringing packed lunch at work instead of dining or going for drive-thru meals. Also, you may want to cut down on junkfoods, which are oftentimes more expensive than whole foods. Just these simple lifestyle changes and adjustments can mean great things to your budget, which impacts your retirement and emergency funds in the long run.
2. Set Up Your Emergency Savings
As a part of your short-term financial objectives, you need to start saving for your emergency funds. You have to keep in mind that there are always unexpected expenses in life. This is why you should be serious about coming up with a realistic figure for your emergency fund, and $500 to $1,000 should be ideal. Upon meeting your goal, then you can further grow it for more security in case you come across a serious financial dilemma in life such as unemployment or sickness. If you think you are not earning enough and your monthly expenses seem to be going higher and higher, then it is time for you to come up with creative solutions to maintain an emergency fund despite the kind of situation you are in. You may start selling items online or holding a garage sale. Taking up a part-time job can also help since this will help you make additional money on the side for your expenses and savings.
In today’s context, it is essential to have emergency funds as you know things always happen unexpectedly. There might be instances such as hospital expenses that needed to settled immediately and cannot wait much longer, you can approach licensed money lender in Singapore and apply for instant personal loan to get through this period until you stabilise. No matter what happens, you should always aim to have an emergency fund.
3. Pay Off Your Credit Card Bills
As much as possible, you should minimize your usage of your credit card. In fact, if you can, you should start thinking about slowly paying off your credit card bills since these only earn so much inerest over time. In the end, you may find yourself low on cash because your paycheck simply goes to your credit card payments. This is a sad reality that many people go through, which makes it highly important to start working towards limiting your expenditures using a credit card.
If it is impossible to pay off all your credit card bills, then you should at least settle the minimum amount. This can prevent you from having to accumulate more debts in the future that only add to your stress level. According to experts, you may start by paying the minimum on all your debts with the exception on the highest-rate credit card debt. Then, if you have extra funds, you can make additional payments on this massive debt until it is paid off in full.
You may also consider paying the smallest debt first until you get to the largest credit card bill. The next thing you know, you are already debt-free. Then, you can start anew and stop using your credit card and use cash instead. This will also help you to become more disciplined since it is easy to pull out that card for all your purchases. But if you are using cash, your purchasing power is limited – and this keeps you more disciplined. Local Money Lender offers fast payday loan, you may turn to this alternative as well.
In between the short- and long-term financial goals is the mid-term plan for your financial growth. Generally, this may include buying life insurance that can cover a percentage of your retirement. Disability insurance policy also helps since this allows you to continue having source of funds even if you are unable to work anymore. Once you have your insurance policy, you may start working towards paying off your loans – slowly, but steadily, until you are completely free from debt payments. By then, you can start thinking about your dreams and aspirations in life such as purchasing your very first home or even a vacation home, somewhere down the road. If you have kids, a college education plan is also essential, so you can prepare for their schooling years before it happens.
Now comes the exciting part of financial goal planning – preparing for your retirement. A long-term goal for your finances means saving money for your old age. A good first step would be saving 10 to 15 percent of your monthly paycheck and putting it in high-interest savings. Then, if you have a large amount of money, you can put this in a fixed deposit account that will yield a considerable interest instead of the minimal rate that a standard savings account offers.
When setting up a long-term goal, you should think about your expected living expenses per year once you hit retirement. The budget you set will dictate the kind of lifestyle you will have. But be sure to include savings for your healthcare expenses since you will need to have enough money to cover for your medical costs. You may also add to your long term goals some money for trips that you probably wish to spend with your spouse and loved ones. Depending on how often you want to travel, you will need to decide on the amount to set up for your retirement funds.
You see, being financially independent is not that complicated to achieve. It all takes some careful planning on how you can make it happen, and this is why establishing financial goals helps a great deal. So, while you have your job, health, and youth, make it a point to grow your emergency and retirement money funds. This way, you can secure your future and reap amazing rewards from your efforts. By considering these techniques we have presented to you, you can say to yourself that it is ultimately possible for you to attain financial freedom – maybe even earlier in your life!