The start of a new year fills people’s hearts with new hopes and plans for success. For most, the number one priority is to experience financial freedom and meeting their financial goals. But how do you start creating goals that will set you up for success?
A great game plan will spell out all the steps you need to take to become financially independent. It’s always a good idea to plan ahead. This is the only way to get mentally, physically, and emotionally prepared for some of the financial challenges that you will face this year. That said, here are 5 tips that will help you create sustainable financial goals for 2018:
Scrutinize your Spending Habits
The first step to creating a financial goal is knowing what you are spending your money on. Are you able to take care of your month-to-month financial needs? Do you know what percentage of your paycheck you’re spending on rent, food, and entertainment? If not, then it might be time to evaluate your spending habits.
The goal here is to review your finances in the previous year and determine what made the biggest dent in your finances. Then, take it a step further and identify spending that you could have avoided. The lessons you learn here will help make you better informed about your finances, thus helping you make better decisions in the future.
You can do this analysis in a couple of ways. You could use a ledger, where you write down all your spending for every month. Alternatively, you could also use a simple Excel spreadsheet to keep track of everything you purchase. Another effective – and easy – method is to use one of the many phone apps that are currently online to track your spending. This will help you analyze your spending habits and identify where you need to cut back. You can also find some great online tools such as the budget planner that you may find helpful.
Create a Realistic Budget
Creating a budget is pretty easy, but creating one that is both realistic and achievable is a different ball game. To do this, your spending analysis will be a big help. It will allow you to dedicate money to the important stuff like rent, utility bills, and other necessities. Then, you can decide what to do with any funds that are left over. Don’t be tempted to spend it all on clothes, eating out, or entertainment! Make sure to put some money away for a rainy day.
Start Saving
According to the experts, you should be saving at least 25 percent of your income every month. If that threshold just isn’t possible for you right now, that’s okay. Start saving what you can now and be consistent about it. You can look into increasing the amount you save with time.
It’s also important to note that a vital part of saving is investing. Investing in things like stocks, bonds, and other securities is always a great place to start – even if you’re working with a small balance. If you want to maximize your chances of success, get an experienced team like afhwm.co.uk to manage your investment portfolio.
Manage your Risk
This year, your health – or lack thereof – should count as your biggest risk. Healthy people don’t need to spend money on doctor’s fees and medication. They are also more productive at work because they don’t need that many sick days off. So use this new year to start living healthy. You can also reduce your risk by getting the right kind and amount of insurance. Getting the wrong policy will wreak havoc on your financial plan in case of any health emergency.
Get Rid of Debt
It is impossible for you to become financially independent if you are wallowing in debt. Therefore, your first goal for 2018 should be paying off any debt as quickly as you can. You can either start with debt that has the highest interest rate or pay off the lowest balance first. Getting rid of your debt will help you stay motivated while pursuing your financial goals for 2018.
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