What do you imagine for your future?
Do you want to buy a home? Be free of student loan debt? Put the brakes on your credit card habit?
To accomplish any of those things, you need financial goals. They’re a way of giving you a clear idea of why you’re saving your money.
To transform your dreams into reality, here are five steps doable plan to help you achieve your financial goals for 2022.
1. Identify and write down your goals: Based on your standard of living and your family identify your financial commitments & goals and then categorize each as short (up to 1 year), mid (2–5 years), or long-term (above 5 years).
Here is a guide to set financial goals for different age groups:
- People in their 20s: Saving for a dream vacation, paying off student debt, buying a car or new gadgets, building a credit score, starting an emergency fund.
- People in their 30s: Paying off non-mortgage debt, saving for child’s education, boosting emergency fund, saving for house-down payment, starting a retirement fund.
- People in their 40s: Max out retirement contribution, pay off the mortgage, save for childrens’ wedding, Investing for future.
2. Analyze your current assets and liabilities: Analyze your current financial situation to know which assets you can use to earn money and what liabilities you need to pay off. This will help you to know how much you have and what you still need to save to achieve your goals.
3. Prioritize goals: Once you have identified your goals it is important to rank each goal in order of importance. Below is a guide to help you get started, however, your exact order will highly depend on your own circumstances and preferences.
- Pay off high-interest debt
- Build a 6-month emergency fund
- Building Retirement fund
- Saving for Wedding
- Home down payment
- Saving for Children’s college
- Saving for home renovation, dream vacation, etc.
4. Set a timeframe (with intermediate milestones): A financial goal should include a time frame in which that goal should be achieved. Break bigger goals into smaller goals and set intermediate milestones(weekly, monthly, quarterly) which will help in achieving them faster.
5. Discuss goals with your spouse and family: Communicate your goals with your spouse and close family members as including them in your journey can help everyone understand how they can help and you will be able to stay on the right path.
Setting goals is one thing. But transforming those dreams into reality is another. The above five tips will help you set and achieve them easily. Be sure to review and adjust your plan regularly as it will keep you on track to meet your goals. You may need to adjust your goals at major events such as birth, marriage, or try changing your spending habits to stay on track and achieve your goals.